UC-NRLF 


SB    SD    D77 


A  History  of  Banking  and  Currency  in 
Ohio  Before  the  Civil  War 


A  THESIS 

Presented  to  the  Faculty  of  the  Graduate  School  of  Cornell 
University  for  the  degree  of 

DOCTOR  OF  PHILOSOPHY 


BY 
CHARLES  CLIFFORD  HUNTINGTON 

Professor  of  Economics  and  Sociology  in  the  Ohio  State  University 


OHIO 
ARCHAEOLOGICAL  AND  HISTORICAL  PUBLICATIONS 


COLUMBUS,    OHIO. 
THE  F.   J.   HEER  PRINTING  CO. 

1915. 


Reprinted  from  the 

Ohio  Archaeological  and  Historical  Quarterly 
Vol.  XXIV.    July,  1915.    No.  3 


TO 

S.B.H. 


336072 


PREFACE. 


In  the  following  pages  on  the  development  of  banking  and 
currency  in  Ohio  from  1803  to  1863  an  attempt  has  been  made 
to  point  out  also  some  of  the  relations  of  those  subjects  to  the 
general  economic  and  political  history  of  the  state. 

The  monograph  had  its  origin  several  years  ago  in  the  semi- 
nary in  business  organization  of  Professor  Jeremiah  W.  Jenks 
while  the  writer  was  a  graduate  student  in  Cornell  University, 
and  to  Professor  Jenks  he  is  indebted  for  many  helpful  sugges- 
tions and  discussions  in  planning  and  prosecuting  the  work  in 
its  early  stages.  To  Dr.  Charles  H.  Hull,  Professor  of  American 
History,  Cornell  University,  and  to  Dr.  Frank  A.  Fetter  of 
Princeton  University,  formerly  Professor  of  Political  Economy 
and  Finance,  Cornell  University,  the  author  also  owes  a  debt  of 
gratitude.  Both  of  these  gentlemen  read  much  of  the  manu- 
script and  their  careful  criticisms  proved  of  great  value  through- 
out the  study. 

What  began  as  an  investigation  of  the  development  of  busi- 
ness organization  in  Ohio  prior  to  1863  soon  resolved  itself  into 
a  study  of  banks  and  banking,  for  during  that  period  banks  were 
the  largest  and  the  most  numerous  representatives  of  the  cor- 
porate form  of  business  organization  in  the  state.  They  were 
the  pioneers  in  big  business  in  Ohio.  It  has  seemed  proper  to 
treat  the  subject  in  two  parts:  first,  because  authorized  banking 
almost  ceased  in  Ohio  between  1843  and  1845,  as  mav  readily 
be  seen  from  the  diagram  in  the  appendix ;  second,  because  the 
basis  of  note  issue,  the  chief  function  of  a  bank  in  those  days, 
was  entirely  different  in  Ohio  before  from  what  it  was  after  the 
dates  unamed;  and  finally,  because  at  that  time  the  practice  of 
incorporating  banks  by  special  acts  of  the  legislature  gave  way 
to  the  method  of  organizing  them  under  general  laws. 

In  carrying  on  this  study  the  Ohio  state  documents  and 
the  early  newspapers  and  local  histories  of  the  state  have  been 
the  most  important  sources  of  material  and  this  fact  delayed  the 

(5) 


6  Preface. 

completion  of  the  work  for  some  years  until  the  writer's  return 
to  Ohio  where  alone  much  of  this  material  was  accessible.  In 
making  available  the  many  state  publications  and  files  of  old 
newspapers,  which  had  to  be  gone  through  without  the  help  of 
an  index,  great  assistance  has  been  rendered  by  the  staffs  of  the 
Cornell  and  Ohio  State  University  Libraries  and  the  Library  of 
Congress,  Washington,  D.  C,  the  Dayton  Public  Library,  Day- 
ton, Ohio,  and  the  Ohio  State  Library,  Columbus,  Ohio. 

Others  to  whom  the  writer  wishes  to  acknowledge  obliga- 
tion are,  Professor  Davis  R.  Dewey  of  the  Massachusetts  Insti- 
tute of  Technology,  for  assistance  in  the  collection  of  material 
and  approval  of  the  completed  monograph  as  a  part  of  the 
Carnegie  Institution's  work  on  the  economic  history  of  the 
United  States,  and  Mr.  E.  O.  Randall,  Secretary  of  the  Ohio 
State  Archaeological  and  Historical  Society,  for  his  kindness  in 
reading  the  manuscript  and  his  active  interest  in  furthering  its 
publication.  Last,  but  not  least,  there  is  the  debt  which  the 
writer  owes  to  his  wife,  for  encouragement  and  assistance  in 
the  various  stages  of  the  work. 

C.    C.    HUNTINGTON. 

Ohio  State  University, 
August  24,  1915. 


CONTENTS. 


PAGE 

PREFACE    5 

TABLE  OF  CONTENTS 7 

INTRODUCTION  15 

Map  of  Ohio 16 

Geography  and  Early  History  of  Ohio . ., 17 

Boundaries   and    Drainage 17 

La  Salle  and  the  French  Fur  Traders 17 

English   Trade   Rivalry 18 

The  Inevitable  Conflict 19 

Pontiac's   Conspiracy    20 

The  Quebec   Bill 21 

The  Moravians  and  the  Squatters 21 

Permanent  Settlement   22 

The  Treaty  of  Greenville 23 

Admission  to  Statehood 23 

A  HISTORY  OF  BANKING  AND  CURRENCY  IN  OHIO  BEFORE  THE 

CIVIL  WAR. 

PART  I.    BANKING  IN  OHIO  UNDER  SPECIAL  CHARTERS. 

1803-1843. 
Note  issue  based  on  general  assets. 

CHAPTER  I.     THE  ANTE-INFLATION  PERIOD.     1803-1814. 

Economic  Conditions 27 

Early  Manufacturing   27 

The  Miami  Country 28 

The  Miami  Exporting  Company  (The  First  Bank) 29 

The  Bank  of  Marietta 32 

The  Bank  of  Chillicothe 33 

The  Bank  of  Steubenville 34 

Other  Banks  Chartered 35 

Unauthorized  Banking   37 

Condition  of  the  Ohio  Banks  prior  to  1815 38 

CHAPTER  II.     THE  INFLATION  PERIOD  OF  1815-17. 

Increase  of  Population 41 

Economic  Conditions   42 

Speculation  and  Inflation  in  the  Mississippi  Valley 43 

Governor  Worthington  on  the  Subject  of  Banks 44 


8  Contents. 

PAGE 

The  Bonus  Law  of  Feb.  23,  1816 45 

Banks  Incorporated  by  the  Bonus  Law 47 

Other  Banks  Chartered  under  Provisions  of  the  Bonus  Law..  48 

Ohio  Banks  incorporated  from  Feb.  24,  1816,  to  Jan.  14,  1818..  49 

Statistics  of  Banking  Capital 50 

Suspension  and  Bank  Note  Depreciation 51 

Convention  of  Ohio  Banks  at  Chillicothe 54 

Branches  of  United  States  Bank  in  Ohio  and  Resumption  of 

Specie  Payment   55 

Proposition  for  a  State  Bank 56 

CHAPTER  III.    THE  CRISIS  OF  1818-19. 

The  Golden  Age  of  the  Western  Country 57 

Distribution  of  State  Banks  in  the  United  States,  1818 58 

Causes  of  the  Crisis  of  1818-19 59 

The  Crisis  in  the  West  occasioned  by  the  U.  S.  Bank 60 

Expansion  of  Credit  by  Western  Branches 60 

Operations  of  U.  S.  Bank  increase  Inflation  in  the  West 61 

Sudden  Restriction  of  Credit  by  United  States  Bank  precipi- 
tates the  Panic 62 

The  United   States   Bank  calls    for   Balances   from   Cincinnati 

Banks  63 

Suspension  of  Specie  Payments  by  Ohio  Banks 63 

Notes  of  Many  Ohio  Banks  refused  at  State  Treasury  in  Pay- 
ment of  Taxes 64 

State  Bank  Notes  refused  at  Cincinnati  in  Payment  of  Public 
Land    Sales :      Chartered    Banks   ask    for   the   Repeal   of 

Bonus  Law    65 

Unauthorized  banking  in  Ohio 65 

Counterfeit  Notes,  Small  Notes,  Post  Notes,  Buying  up  Notes 

at  Discount,  and  Tax  on  Unauthorized  Banks 67 

Specie  Drained  from  Ohio  by  the  United  States  Bank 69 

Fall  of  Prices  in  Ohio  and  the  West  Generally 70 

Debt  and  Distress  in  the  Mississippi  Valley 71 

Report  of  the  Select  Bank  Committee  of  the  Ohio  Legislature.  72 

Recommendations  of  the  Committee 72 

Condition  of  Chartered  Banks  in  Ohio,  January,  1819 73 

Table  showing  Condensed  Statement  of  Assets  and  Liabilities 

of  Chartered  Banks 75 

The   Ratio   of   Circulation   to   Capital   and   the   Proportion   of 
Capital,  Circulation,  and  Deposits  to  Specie  for  Chartered 

Banks,  January,  1819 78 

The  Distribution  of  Ohio  Banks  by  Counties  and  the  Propor- 
tion of  Capital  to  Population,  January,  1819 79 


Contents.  9 

PAGE 

Statement  of  Bank  of  John  H.  Piatt  &  Co.,  Cincinnati,  March, 

1819 81 

Depreciation  of  Ohio  Bank  Notes  in  1819  and  1820 81 

Specie  paying  Banks  of  Ohio  in  1820 83 

CHAPTER  IV.    THE  ATTEMPT  TO  TAX  THE  BRANCHES  OF  THE  UNITED 
STATES  BANK. 

Early  State  Opposition  to  the  Bank 85 

Report   of   Joint   Committee  of  the   Ohio   Legislature   on   the 

Expediency  of  Taxing  the  Branches  of  the  U.  S.  Bank. .  86 
Substitute  Report  adopted  by  the  Ohio  House  of  Representa- 
tives      87 

Hostility  to  the  Bank  increases  in  1818 88 

Ohio  enacts  a  Law  taxing  Branches  of  the  Bank  in  the  State..  89 

The  Case  of  McCulloch  vs.  Maryland 89 

The  State  forcibly  collects  Tax  from  Chillicothe  Branch 90 

Arrest  and  Trial  of  State  Officials  concerned  in  Collecting  the 

Tax    91 

Excitement  over  the  Affair 92 

Ohio  Elections  in  Fall  of  1819  influenced  by  Bank  Fight 93 

Hard  Times  increase  Hostility  to  the  Bank 94 

Report  of  Special  Committee  of  the  Ohio  Legislature 94 

Recommendations  and  Resolutions  offered  by  the  Committee..  96 
The    Ohio    Legislature    reaffirms    the    Kentucky   and    Virginia 

Resolutions  and  Outlaws  the  United  States  Bank 96 

The  Case  of  Osborn  vs.  The  United  States  Bank 98 

The  People  of  Ohio  submit  to  the  Decision  of  Supreme  Court.  100 

CHAPTER  V.     PERIOD  OF  DEPRESSION  AND  RECOVERY,  1820-1830. 

Depression  and  Low  Prices  in  the  Early  20's 102 

Dullness  in  Land  Sales  and  Lack  of  Immigration  into  State..  104 
Bad  Banking  and  Depreciation  of  Ohio  Bank  Notes  not  the 

Chief  Cause  of  the  Depression 105 

Lack  of  Markets  for  the  Surplus  Products  of  the  State 106 

Opening  of  the  Erie  Canal  and  Beginning  of  Ohio  Canals,  1825.  107 

Industrial  and  Social  Awakening  in  the  State 107 

Dissatisfaction  with  the  Operation  of  the  Bonus  Law 109 

Difficulty  in  Collecting  State's  Claims  against  Banks Ill 

Tax  on  Bank  Dividends  substituted  for  the  Bonus 112 

Lack  of  Banking  Statistics  from  1820  to  1830 113 

Need  of  Banking  Capital  in  Cincinnati  in  1826 114 

State  Loans  and  Public  Works  increase  the  Money  Supply 115 

Project  of  a  State  Bank  Discussed 115 

Two  New  Banks  authorized  by  the  Legislature 116 

Depreciation  of  Ohio  Bank  Notes  in  1822  and  1828..  117 


10  Contents. 

PAGE 

Ohio  Bank  Failures  from  Jan.  1,  1811  to  July  1,  1830 118 

Causes  of  Failures  of  Majority  of  Ohio  Banks 119 

Benefits  derived  from  surviving  Banks 120 

Distribution  of  Banks  and  Capital  in  Ohio,  January,  1830 121 

Number  and  Capital  of  State  Banks  in  Ohio,  1805  to  1830....  122 

Diagram  showing  changes  in  banking  capital,  1805-30 123 

CHAPTER  VI.    THE  SECOND  PERIOD  OF  EXPANSION.    1831  TO  1836. 

An  era  of  internal   improvements 124 

Increase  in  immigration 124 

Growth  of  population  in  Ohio 125 

Effect  of  transportation  facilities 125 

Foreign  commerce  and  foreign  loans 125 

Period  of  business  expansion 126 

Excessive  credit  and  speculation 127 

Rapid   growth    of   local  banking 127 

Refusal  to  recharter  U.  S.  Bank 127 

Withdrawal  of  public  funds  from  U.  S.  Bank  and  their  deposit 

in  state  banks 128 

Payment  of  national  debt  and  distribution  of  surplus  among 

the  states  128 

Relation  of  credit  and  speculation 129 

Rapid  increase  of  bank  notes  and  other  money  in  U.  S 130 

Bank  circulation  in  Ohio 130 

Charter  of  Bank  of  Norwalk 131 

Revival  of  Dayton  Bank 131 

Opening  of  Commercial  Bank  of  Cincinnati 132 

Tax  on  dividends  of  banks  increased  to  5% 132 

Bank  of  Zanesville  chartered 133 

Re-opening  of  Commercial  Bank  of  Lake  Erie 134 

Scarcity  of  money  in  Ohio 134 

Revival  of  project  for  State  Bank 135 

Two  million-dollar  banks  authorized  in  Cincinnati 136 

Message  of  Gov.  Lucas,  Dec.  1833 137 

Banking  capital  in  Ohio  held  by  non-residents 137 

Annual  cost  of  foreign  banking  capital  to  people  of  Ohio 138 

Ohio  bank  notes  depreciated  beyond  vicinity  of  issuing  bank..  138 

Financial  disturbances  early  in  1834 138 

Defeat  of  State  Bank  Bill 139 

Ten  more  local  banks  chartered  in  1834 139 

Clinton  Bank  of  Columbus  organized  by  office-holders 140 

Capital  stock  of  new  banks  over-subscribed 141 

The  Ohio  Life  Insurance  and  Trust  Co 141 

Revival  of  Miami  Exporting  Co.  and  Urbana  Banking  Co 143 

Number  and  capital  of  Ohio  banks  in  March,  1835 144 


Contents.  11 

PAGE 

Ohio  banking  statistics  in  1835 145 

Proportion  of  specie  to  circulation 146 

Distribution  of  banks  by  counties  and  ratio  of  capital  to  popu- 
lation in  1835 147 

Climax  of  the  inflation  in  1836 149 

The  "No-Bank"  Party  in  power 149 

Report  of  legislative  committee  against  chartering  more  banks.  149 

U.  S.  Treasury  Department  urges  states  to  suppress  small  notes  150 

Governor  Lucas  recommends  prohibition  of  bills  less  than  $5..  151 

Extent  of  circulation  of  small  bills 152 

Banks  asked  to  give  up  vested  rights  to  issue  small  bills 153 

Replies  of  the  banks 153 

Law  of  March  14,  1836,  prohibiting  small  notes 154 

CHAPTER  VII.    THE  PANIC  OF  1837  AND  THE  RESULTING  DEPRESSION. 
1837-43. 

The  national  government  tries  to  check  bank  note  inflation 156 

The  Specie  Circular 156 

Relation  of  bank  note  inflation  to  public  land  sales 157 

General  suspension  of  specie  payment 157 

The  Panic  of  1837 159 

Causes  of  suspension  of  Ohio  banks 159 

Ohio  bank  convention,  June  1837 160 

Statistics  of  Ohio  banks  in  1837 160 

Repeal  of  law  prohibiting  small  notes 161 

Partisan  nature  of  the  vote 162 

Resumption  of   specie  payment 162 

Statistics  of  Ohio  banks  in  1838 163 

Suspension  again  in  1839 163 

The  Bank  Commissioner  Law 164 

First  annual  report  of  bank  commissioners 164 

Indebtedness  of  directors  and  officers 165 

Re-enactment  of  law  forbidding  small  notes 167 

Messages  of  Governor  Shannon 167 

Message  of  Governor  Corwin 168 

Question  whether  to  adopt  State  Bank  or  Safety-Fund  System.  168 

Currency  fluctuation  in  Ohio 169 

Exports  from  Ohio  in  1840 169 

Effect  of  internal  improvements 169 

Canal  receipts  and  shipments  at  Cleveland 170 

Low  prices  and  hard  times 170 

Agitation  for  new  banking  system  in  Ohio 171 

Third  annual  report  of  bank  commissioners 173 

Taxes  paid  by  Ohio  banks,  1831  to  1843 174 

Difficulty  in  collecting  taxes   from  banks 175 


12  Contents. 

PAGE 

Bank  failures  in   1841-2 175 

Bank  question  in  Ohio  involved  in  party  politics 177 

The  general  banking  law  of  1842 177 

Statistics  of  Ohio  banks  in  1842 178 

Expiration  of  charters  of  majority  of  Ohio  banks  in  1843 180 

PART  II.     BANKING  IN  OHIO  UNDER  GENERAL  LAWS. 

1843  to  1863. 
Note  issue  secured  by  safety  fund  or  bond  deposit. 

CHAPTER  VIII.     CONDITIONS   PRIOR  TO  1845. 

Specie  Paying  Banks  in  Ohio  in  1843  and  1844 185 

Economic  Conditions  in  the  State 186 

Exports  and  Exchange  Operations 

Foreign  and  Unauthorized  Bank  Circulation 188 

Inadequate  Banking  Facilities  and  Low  Prices 

Private  Capital  in  the  State 190 

Objections  to  the  General  Banking  Law  of  1843 191 

Agitation  for  a  New  Banking  Law 192 

Difference  of  Opinion  as  to  System  needed 192 

Kelley's  Bank  Bill  in  the  Legislature 193 

CHAPTER  IX.    THE  STATE  BANK  OF  OHIO  AND  INDEPENDENT  BANKS. 
1845-1851. 

The  General  Banking  Law  of  Feb.  24,  1845 195 

Provisions  relating  to  the  State  Bank 196 

Provisions  relating  to  Independent  Banks 197 

General  Provisions  of  the  Law 197 

Meeting  of  Board  of  Bank  Commissioners 198 

Organization  of  the  Board  of  Control 198 

Formation  of  New  Banks 199 

Effect  of  Increase  in  Banking  Facilities 199 

Opposition  to  the  New  Law  in  1845  and  1846 20d 

Increase  of  Bank  Circulation  and  Prices 201 

Distribution  of  Banking  Facilities  throughout  the  State 202 

Statistics  of  Growth  of  Banks  under  the  General  Law 203 

CHAPTER  X.    THE  NEW  CONSTITUTION  AND  THE  FREE  BANKING  LAW 
OF  1851. 

Failure  of  Old  Banks 205 

Anti-Bank  Party  again  in  Power 206 

The  Constitutional  Convention 206 

Bank  Reform  in  the  Legislature 207 

The  Free  Banking  Law  of  March  21,  1851 209 

Free  Banks  organized  in  1851  and  1852 210 


Contents.  13 

PAGE 

CHAPTER  XI.     BANKING  AND  CURRENCY  CONDITIONS,  1851-1854. 

End  of  another  Period  of  Bank  Expansion 211 

Expansion  Period  one  of  Business  Prosperity 211 

The  Profits  of  the  Banks. 212 

Sources  of  Banking  Profits 213 

The  10%  Interest  Law  of  1850 214 

Bankers  Interested  in  Broker  Establishments 215 

Increase  of  Private  Banks  and  Broker  Firms 216 

Failure  of  Laws  against  Unauthorized  Banking 218 

Demand  for  more  Banking  Capital  in  Ohio 220 

Depreciated  Currency  in  the  State : . .  221 

Schemes  to  Avoid  Redemption 222 

The  Use  of  Banks  for  Deposits  and  Loans 224 

Bank  Failures   in   1854 225 

Condition  of  Remaining  Banks 226 

CHAPTER  XII.    BANK  TAXATION  IN  OHIO  BEFORE  THE  WAR. 

Decline  in  Banking  Facilities  attributed  to  Tax  Laws 228 

Taxation  of  Dividends  or  Profits  prior  to  1850 228 

Tax  on  Capital  and  Surplus  in  1850  and  1851 230 

Opposition  to  Tax  Law  of  1851 231 

Tax  on  Loans  and  Discounts 231 

Refusal  of  Banks  to  Pay  the  Tax 232 

The  Crow  Bar  Law  of  1853 , 232 

Kelley's  Bank  Tax  Law  of  1856 234 

Vacillating  Character  of  Rest  of  Period 234 

CHAPTER  XIII.    THE  BANK  OF  OHIO,  PANIC  OF  1857,  AND  NOTE  RE- 
DEMPTION AGENCIES. 

Further  Decline  in  Banking  Capital  in  1855 236 

Act  to  Incorporate  the  Bank  of  Ohio  and  Other  Banks 236 

Objections  to  the  Proposed  Banking  Law 237 

Governor  Chase  favors  Free  Banking 237 

Another  State  Bank  Law  rejected  by  the  Voters 238 

Distribution  of  Ohio  Banks  in  January,  1857 239 

Industrial  Progress  in  Ohio,  1852  to  1857 241 

Failure  of  Ohio  Life  Insurance  and  Trust  Co 242 

The  Panic  of  1857 242 

Failure  of  Trust  Company  threatens  State  Bank  of  Ohio 243 

The  State  Bank  establishes  a  Note  Redemption  Agency 244 

The  Ohio  Bank  Agency  of  1850 244 

The  Opportunity  for  a  Redeeming  Agency 245 

The  Agencies  of  1854  and  1857 245 

Agitation  for  an  Ohio  Valley  Clearing  House 246 

The  Brokers'  Assorting  System 246 

The  Bank  of  the  Ohio  Valley 247 


14  Contents. 

CHAPTER  XIV.    CONCLUSION.  PAGE 

Majority  of  Ohio  Banks  survive  the  Panic 249 

Many  Ohio  Banks  become  National  Banks  after  1863 250 

End  of  Period  of  Note  Issue  under  General  Ohio  Laws 250 

Classes  of  Ohio  Banks  under  General  Laws 251 

Division  of  Banks  according  to  Security  for  Note  Issue 252 

Objection  to  Safety  Fund  Security 252 

Comparison  of  State  Bank  of  Ohio  with  that  of  Indiana 253 

Comparison   of    State   Bank   of   Ohio   with   New   York   Safety 

Fund  System   253 

Comparison  of  State  Bank  with  Stock  Banks 255 

APPENDIX. 

Quotations  of  Ohio  bank  notes  at  Philadelphia 259 

Diagram  showing  above,  from  1814  to  1841 264 

Receipts    from   public   land    sales    in    the    United    States    each   year, 

1796  to  1841 265 

Distribution    of    real    estate    loans    of    the    Ohio    Life    Insurance    & 

Trust  Co.,  by  counties  in  Ohio,  1836 266 

Digest  of  General  Banking  Law  of  Feb.  24,  1845 267 

Digest  of  Free  Banking  Law  of  March  21,  1851 271 

Diagram  showing  circulation  of  different  classes  of  Ohio  banks  from 

1846  to  1863 274 

Diagram  showing  capital  of   different  classes  of   Ohio  banks   from 

1846  to   1863 275 

Statistical  tables  showing  detailed  resources  and  liabilities  of   each 

class  of  Ohio  banks,  1846-1863 276 

Diagram  showing  capital,  circulation,  loans,  deposits,  and  specie  of 

Ohio  banks  from  1835  to  1863 283 

Statistics  of  state  banks  in  the  United  States,  1784-1863 288 

Table  showing  December  prices  of  certain  commodities  at  Cincin- 
nati, 1829-59 291 

Table  showing  principal  and  interest  of  Ohio  state  debt,  value  of 
taxable  property  in  the  state,  and  gross  state  revenues  and  ex- 
penditures each  year,  from  1833  to  1856 292 

Table  showing  profits  of  each  stock  bank  and  each  branch  of  State 

Bank 293 

Financial  statement  of  the  Bank  of  the  Ohio  Valley,  May  6,  1862. . .  295 

Depreciation  of  notes  of  Ohio  banks  that  failed,  1831-43 296 

Premium  on  exchange  at  certain  Ohio  towns,  1832-43 297 

Diagram    showing   ratio    of    circulation   to   capital    for    safety    fund 

and  stock  banks 298 

BIBLIOGRAPHY   299 

INDEX  3C7 


A  HISTORY  OF  BANKING  AND  CURRENCY 
IN  OHIO  BEFORE  THE  CIVIL  WAR. 


INTRODUCTION. 

(15) 


.^ 


(16) 


GEOGRAPHY  AND  EARLY  HISTORY  OF  OHIO, 


Boundaries  and  Drainage,  —  The  State  of  Ohio  has  an 
area  of  41,240  square  miles.*  Its  longest  east  and  west  measure- 
ment is  225  miles,  and  its  longest  north  and  south  measurement 
210  miles.  Extending  from  the  Ohio  River  to  Lake  Erie  the  state 
lies  partly  in  the  drainage  basin  of  the  Mississippi  River  and 
partly  in  that  of  the  St.  Lawrence,  about  one-fourth  of  the 
state  draining  into  Lake  Erie  and  the  rest  into  the  Ohio.  The 
principal  rivers  of  the  state  which  flow  into  the  Ohio  are, 
naming  them  from  east  to  west,  the  Mahoning,  the  Muskingum, 
the  Hocking,  the  Scioto,  the  Little  Miami,  and  the  Great  Miami, 
while  the  Grand,  the  Cuyahoga,  the  Sandusky,  and  the  Maumee 
rivers  flow  into  Lake  Erie.  Nearly  three-fourths  of  the  north- 
ern boundary  of  Ohio  is  formed  by  Lake  Erie,  its  southern 
shore  line  in  Ohio  being  220  miles  in  extent.  All  of  the  southern 
and  more  than  half  of  the  eastern  boundaries  of  the  state  are 
formed  by  the  Ohio,  which  flows  for  more  than  436  miles  along 
the  borders  of  the  state. 

These  waterways  have  been  very  important  factors  in  the 
history  of  Ohio,  —  influencing  the  movements  of  the  early  ex- 
plorers, and  guiding  the  fur  traders  and  frontiersmen  that  fol- 
lowed them;  deciding  the  location  of  the  early  settlements,  and 
determining  the  distribution  of  later  population;  facilitating  the 
marketing  of  surplus  products ;  supplying  water  power  for  mills 
and  factories;  and  affording  means  of  communication  between 
different  parts  of  the  state,  as  well  as  with  other  parts  of  the 
country. 

La  Salle  and  the  French  Fur  Traders.  —  As  early  as  1669 
the  Frenchman,  Joliet,  traversed  Lake  Erie  from  west  to  east,1 
while  the  next  year  LaSalle  is  said  to  have  crossed  the  region 
south  of  the  lake,  possibly  by  way  of  the  Cuyahoga  and  Mus- 


*Ohio  Topographical  Survey,  1910,  p.  55. 
1  Cartier  to  Frontenac  —  Justin  Winsor,  p 


218. 
(17) 


18  Ohio  Arch,  and  Hist.  Society  Publications. 

kingum  portage  route,  and  to  have  found  the  Ohio.2  Thus  what 
is  now  Ohio  became  part  of  the  great  domain  of  France  in  Am- 
erica. It  is  said  that  at  the  mouth  of  the  Cuyahoga  the  French 
held  a  conference  with  the  Five  Nations  as  early  as  i684.3  Soon 
after  that  the  French  traders  were  pushing  along  the  south  shore 
of  Lake  Erie  and  up  the  valleys  of  the  Sandusky  and  the  Mau- 
mee  on  their  way  to  the  Wabash.  No  permanent  establishment, 
however,  was  made  in  or  near  Ohio  during  the  remainder  of 
that  century.  In  1701  Cadillac  established  Detroit  as  a  strategic 
point  from  which  to  control  the  fur  trade,  and  the  Maumee,  the 
Sandusky,  and  the  territory  down  to  the  Ohio  became  depend- 
encies of  this  center.4 

English  Trade  Rivalry.  —  At  this  time  the  adventurous 
traders  of  the  English  were  already  crossing  the  Alleghanies 
from  the  seaboard  colonies  and  fixing  their  huts  along  the  Ohio.5 
By  1725  English  traders  from  Carolina  were  trading  with  the 
Miamis  on  the  Wabash,6  and  English  trade  rivalry  among  the 
tribes  of  both  the  Ohio  and  the  Lakes  soon  became  a  serious 
matter  with  the  French  officials  and  merchants.7  The  trade 
war  between  the  English  and  the  French  for  the  West  continued 
during  the  entire  i8th  cenutry.  They  first  struggled  for  the 
possession  of  strategic  points  on  the  Wabash.  This  was  the 
incentive  which  induced  the  French  to  found  Vincennes  about 
I735-8  Next  came  another  battle  for  the  Ohio  country.  Prob- 
ably as  early  as  1730  English  traders  from  Pennsylvania  were 
making  their  way  across  middle  or  southern  Ohio.9  From  that 
time  until  the  middle  of  the  century  the  contest  was  narrowed 


2  La  Salle  and  the  Discovery  of  the  Great  West  —  Francis  Parkman, 
p.  22.     See  also  Discovery  of  America  —  John  Fiske,  Vol.  II.,  p.  532. 
'The  Ohio  Valley  in  Colonial  Days  —  Berthold  Fernow,  p.  40. 

4  Cooley's  Michigan,  pp.  16,  18  and  19. 

5  Cartier  to  Frontenac  —  Justin  Winsor,  p.  364. 
"Ohio  — Rufus  King,  pp.  49-51. 

7  France  in  America  —  Reuben  Thwaites,  p.  91. 

8  The  Wabash  Trade  Route  —  Benton,  p.  29;  Also  Bancroft's  History 
of  the  United  States,  Vol.  II.,  p.  225;  The  Mississippi  Basin  —  Winsor, 
p,  149;  and  France  in  America  —  Reuben  Thwaites,  p.  93. 

9  Ohio  —  Rufus    King,   pp.    53,    57.     Also    The    Mississippi    Basin  — 
Winsor,  p.  149. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      19 


to  the  region  south  of  Lake  Erie.10  In  1745  English  traders 
were  at  Sandusky  erecting  houses,  perhaps  the  first  English 
structures  in  Ohio.11  In  1748  an  English  alliance  with  the  Mi- 
amis  effectually  established  English  trade  on  the  Wabash,  and 
the  packmen  of  Pennsylvania  and  Virginia  pushed  boldly  into 
the  Ohio  Valley,  establishing  their  most  advanced  post  that  year 
at  Pickawillany  on  the  Great  Miami  River.12  It  was  estimated 
that  during  a  single  season  at  this  time  some  300  English  traders 
were  leading  their  packhorses  and  dragging  their  batteaux  over 
the  mountain  passes  into  the  Ohio  Valley.13 

The  Inevitable  Conflict.  —  The  French  looked  with  great 
alarm  upon  this  intrusion  of  English  packmen  into  Ohio,  which 
not  only  threatened  their  fur  trade  in  that  region,  but  endan- 
gered the  communications  between  Louisiana  and  Canada.14  In 

1748  the  commandant  at  Detroit  received  instructions  to  be  wary 
and,  though  peace  ostensibly  existed,  to  use  force  if  necessary 
to  prevent  the  English  getting  a  lodgment  in  the  Ohio  country.15 
The  following  year  Celeron  de  Bienville  was  sent  with  a  strong 
force  down  the  Alleghany  and  Ohio  rivers  to  take  formal  pos- 
session  by   burying  leaden   plates   at   the  mouths   of   the   chief 
streams,  and  to  drive  out  English  traders.     He  found  traces  of 
English  packmen  everywhere,  and  though  he  arrested  four,  his 
report  was  very  discouraging.     It  was  then  that  the  Governor 
of  Quebec  asked  for  10,000  French  peasants  to  settle  the  region 
before  the  English  should  do  so.16 

The  English  colonies  were  already  looking  upon  the  Ohio 
Valley  as  an  important  outlet  to  their  growing  population.  In 

1749  the  Ohio  Company  was  chartered  for  trading  and  coloniz- 
ing purposes  west  of  the  mountains,  and  the  next  year  it  sent 
Christopher   Gist  to  explore  the   Ohio   region.     He   met   many 


10  The  Wabash  Trade  Route  —  Benton,  p.  30. 

"The  Mississippi  Basin  —  Winsor,  p.  248. 

u  Ibid,  pp.  243  and  249. 

u  Ibid,  p.  249.    Also  Montcalm  and  Wolfe  —  Parkman,  Vol.  I.  p.  43. 

14  Narrative  and  Critical  History  of  America  —  Justin  Winsor,  Voi 
V.,  p.  12. 

15  The  Mississippi  Basin  —  Winsor,  p.  249. 
"France  in  America  —  Thwaites,  p.  151. 


20  Ohio  Arch,  and  Hist.  Society  Publications. 

Scotch-Irish  traders  who  were  operating  in  what  is  now  Ohior 
and  his  favorable  report  greatly  stimulated  English  interest  in 
the  West.  At  once  daring  Virginia  settlers  began  moving  over 
the  mountains.17  It  was  evident  that  a  collision  between  the 
French  and  the  English  could  not  be  postponed  much  longer. 
In  fact  the  inevitable  conflict  was  at  hand,  and  there  was  on 
both  sides  a  belief  that  whoever  should  be  left  in  possession  of 
the  Lakes  and  the  Ohio  at  the  close  of  the  war  about  to  begin 
would  control  the  continent.18  Indeed  the  Old  Northwest,  as 
Professor  Hinsdale  says,  was  "the  occasion  of  the  final  struggle 
for  dominion  between  France  and  England  in  North  America."1 

Pontiac's  Conspiracy.  —  Upon  the  outbreak  of  the  Old 
French  and  Indian  War  in  1754,  practically  all  the  English  trad- 
ers and  pioneers  beyond  the  mountains  withdrew  to  the  older 
settlements.  Probably  not  a  British  trader  or  settler  remained 
west  of  the  Alleghanies.20  But  after  the  treaty  of  Paris  in  1763, 
which  closed  the  war  and  transferred  Canada  and  the  great  cen- 
tral valley  east  of  the  Mississippi  to  England,  the  westward 
movement  of  the  English  began  again  with  renewed  energy. 
Not  only  traders  but  settlers  also  at  once  began  pushing  over  the! 
mountains  into  the  Ohio  Valley,  although  a  proclamation  of  the 
king  in  1763  had  forbidden  the  English  colonists  to  attempt  to 
occupy  the  region  west  of  the  mountains,  which  was  made  crown 
lands  to  be  given  over  to  the  uses  of  the  Indians.21 

This  movement  was  suddenly  checked,  however,  by  the  In- 
dians themselves  in  the  Conpiracy  of  Pontiac,  when  that  Ot- 
tawa chieftain,  finding  the  Indians  fiercely  resenting  the  intrusion 
of  settlers  upon  their  lands,22  succeeded  in  organizing-  the  tribes 
of  the  Lake  Region  into  the  most  formidable  Indian  movement 
in  American  history.23  For  more  than  a  year  terror  reigned 
supreme  along  the  whole  English  frontier,  and  it  was  only  with 


17  France  in  America  —  Thwaites,  pp.  152-4. 
MThe  Mississippi  Basin  —  Winsor,  p.  336. 
"The  Old  Northwest  — B.  A.  Hinsdale,  p.  V. 

20  France  in  America  —  Thwaites,  pp.  165  and  181. 

21  The  Western  Movement  —  Winsor,  p.  2. 

22  The  Conspiracy  of  Pontiac  —  Parkman,  Vol.  I.,  pp.  175  and  176. 

23  Formation  of  the  Union  — A.  B.  Hart,  p.  40. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      21 

ic  greatest  difficulty  that  Pontiac  was  beaten.  Finally,  how- 
ever, after  winning  the  bloody  battle  of  Bushy  Run  in  August, 
1764,  Col.  Henry  Bouquet  pushed  across  the  Ohio  and  pene- 
trated the  wilderness  as  far  as  the  Muskingum  River.  Here  in 
October,  1764,  he  succeeded  in  making  a  treaty  with  the  Indians, 
and  again  the  English  traders,  hunters,  and  settlers  began  to 
enter  the  Ohio  country,  for  at  that  time  no  region  in  North 
America  had  the  reputation  of  being  so  inviting  as  the  Ohio 
Valley.24 

The  Quebec  Bill,  —  To  prevent  the  fur  trade  of  the 
Northwest  from  slipping  away  to  the  French  and  Spanish  the 
English  home  government  desired  to  placate  the  Indians,  and 
therefore  endeavored  to  restrain  the  settlers  from  crossing  the 
Ohio.25  This  program,  however,  was  little  heeded  by  the  hundreds 
of  English  colonists  who  were  already  entering  the  Ohio  Valley, 
and  many  of  whom  crossed  to  the  northern  side  of  the  river; 
neither  did  it  meet  with  the  approval  of  the  Colonies  themselves, 
several  of  which  claimed  various  portions  of  the  northwest. 
In  1774,  largely  as  a  means  of  extinguishing  all  claims  of  Con- 
necticut, Massachusetts,  and  Virginia  to  this  region  Parliament 
passed  the  Quebec  Bill,  which  annexed  to  Quebec  the  whole 
territory  between  the  Ohio  and  Mississippi  Rivers  and  the  Great 
Lakes.20  But  just  as  the  Royal  Proclamation  of  1763  failed  to 
prevent  the  settlers  from  crossing  the  mountains  and  only  served 
to  anger  the  Colonies ;  so  the  Quebec  Bill  not  only  failed  to  keep 
settlers  from  crossing  the  Ohio,  but  was  seized  upon  as  one  of 
the  grievances  justifying  the  Revolution.27 

The  Moravians  and  the  Squatters.  —  As  early  as  1772 
Zeisberger  and  his  Moravians  had  crossed  the  Ohio,  pushed  into 
the  interior,  and  laid  the  foundation  of  a  white  settlement  in  the 
valley  of  the  Tuscarawas,  one  of  the  branches  of  the  Mus- 
kingum.28 And  before  the  Revolution  many  pioneer  settlements 


24  The  Western  Movement  —  Winsor,  p.  12. 

25  Ibid,  pp.  23  and  25. 

26  Formation  of  the  Union  — Hart,  p.  60. 

"Formation  of  the  Union  — Hart,  p.  60.     Also  The  Old  Northwest 
—  Hinsdale,  p.  147.    The  Western  Movement  —  Winsor,  p.  2. 

28  The  Western  Movement  —  Winsor,  p.  56.    Also  King's  Ohio,  p.  126. 


22  Ohio  Arch,  and  Hist.  Society  Publications. 

had  been  made  on  the  northern  side  of  the  Ohio  as  far  down 
as  the  mouth  of  the  Muskingum.  In  1776  Col.  Patterson  re- 
ported several  of  these  so-called  "tomahawk"  improvements  be- 
low the  Hocking,  and  two  years  later  they  had  already  extended 
for  thirty  miles  up  the  Muskingum.29  These  people  were  the 
subject  of  frequent  complaints  by  the  Indians,  who  were  de- 
termined to  preserve  their  hunting  grounds;  and  Congress  in 
September  1783  issued  a  proclamation  against  unauthorized  ap- 
propriations of  the  Indian  lands;  but  in  vain,  there  continued  a 
steady  flow  of  settlers  across  the  Ohio,  giving  the  Indians  good 
reason  to  suspect  the  Americans  of  a  design  to  encroach  upon 
their  tribal  lands.30 

Permanent  Settlement.  —  After  the  close  of  the  Revolu- 
tion the  fame  of  the  lands  along  the  Ohio  spread  rapidly  and  com- 
panies began  to  be  formed  for  the  purpose  of  planting  colonies 
there.  In  January  1785,  at  the  treaty  of  Fort  Mclntosh  the  In- 
dian title  to  a  large  part  of  the  land  between  Lake  Erie  and  the 
Ohio  river  was  extinguished,31  and  in  June  1787  Congress  passed 
the  famous  Ordinance  of  1787  providing  for  the  government 
of  the  Northwest  Territory.32  A  few  months  later,  in  October 
1787,  the  Ohio  Company,  composed  largely  of  people  from 
Massachusetts,  contracted  for  the  purchase  of  about  1,500,000 
acres  along  the  Ohio  between  the  Scioto  and  Muskingum  riv- 
ers, and  early  the  following  spring  they  made  what  is  known 
as  the  first  permanent  settlement  in  Ohio,  when,  on  the  seventh 
of  April,  1788,  they  founded  Marietta  at  the  mouth  of  the  Mus- 
kingum.33 In  October  of  the  same  year  a  company  composed 
chiefly  of  New  Jersey  people  contracted  for  a  large  tract  of  land 
between  the  mouths  of  the  Miamis  and  in  November  1788  they 
founded  a  town,  called  Columbia,  at  the  mouth  of  the  Little  Mi- 
ami. A  month  later,  about  five  miles  below  this  point,  a  town 
was  started  on  the  Ohio  river  just  opposite  the  mouth  of  the 


28  King's  Ohio,  pp.  191-2. 

30  The  Western  Movement  —  Winsor,  pp.  243-5. 


31  Historical  Collections  of  Ohio  —  Henry  Howe,  Vol.  L,  p.  36. 
83  Formation  of  the  Union  —  Hart,  p.  108. 

83  Howe's  Historical  Collections  of  Ohio,  Vol.  I.,  pp.  37  and  131.    The 
Western  Movement  —  Winsor,  pp.  296  and  298. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      23 

Licking.     This  later  came  to  be  known  as  Cincinnati,34  and  was 
destined  soon  to  distance  its  early  rivals  in  growth  of  population 
and  commercial  importance.    It  was  not  until  after  the  treaty  of 
Greenville    in     1795,     however,    that    Cincinnati    made    much" 
growth.35 

The  Treaty  of  Greenville.  —  As  the  settlements  north  of 
the  Ohio  increased  in  number  and  population  the  Indians  became 
more  and  more  uneasy.  Hostile  bands  were  soon  hovering  about 
the  Muskingum  and  Miami  settlements,  and  before  long  open 
warfare  broke  out.  In  1790  an  expedition  from  Cincinnati  led 
by  General  Harmar  resulted  in  failure,  and  the  following  year 
Gov.  St.  Clair's  strong  force,  which  proceeded  against  the  In- 
dians on  the  Maumee,  was  totally  defeated.  Indian  outrages  of 
all  kinds  increased  until  immigration  north  of  the  Ohio  almost 
ceased.  Finally,  however,  in  1794  an  army  under  Gen.  Anthony 
Wayne  inflicted  a  severe  defeat  upon  the  Indians  at  the  rapids 
of  the  Maumee  after  which  Wayne  burned  many  of  their  vil- 
lages, laid  yaste  their  cornfields  for  miles,  and  erected  Fort  De- 
fiance in  the  heart  of  their  country.36  This  brought  the  Indians 
to  terms,  and  at  Greenville  in  1795  eleven  of  the  most  powerful 
tribes  of  the  Northwest  made  a  treaty  with  Gen.  Wayne,  which 
confirmed  the  boundary  line  fixed  at  the  treaty  of  Fort  Mcln- 
tosh.  This  opened  all  of  Ohio  to  white  settlement  except  the 
northwestern  part. 

Admission  to  Statehood.  —  During  the  next  few  years 
following  the  treaty  of  Greenville  in  1795  a  wave  of  settlers  began 
to  pour  into  the  territory.  Population,  hitherto  confined  chiefly 
to  the  vicinity  of  the  Ohio,  began  to  diverge  from  Marietta  on 
the  one  hand  and  Cincinnati  on  the  other,  towards  the  height  of 
land  between  the  Ohio  and  Lake  Erie.  Naturally  the  river 
valleys  were  the  first  to  become  populous.  Soon  permanent  set- 
tlers were  occupying  the  valleys  of  the  Muskingum,  the  Hocking, 
the  Scioto,  and  the  Miamis,  and  a  range  of  towns  across  the 
country  north  of  the  early  settlements  marked  the  progress  of 


34  Howe's  Historical  Collections  of  Ohio,  Vol.  I,  pp.  38  and  747.   The 
Western  Movement  —  Winsor,  p.  315. 

35  King's  Ohio,  p.  215. 

88  Howe's  Historical  Collections  of  Ohio,  Vol.  I.,  p.  40. 


24  Ohio  Arch,  and  Hist.  Society  Publications. 

population.37  In  the  Miami  Valley,  Hamilton  was  laid  out  in 
1794,  Dayton  in  1796,  and  Springfield  in  1801.  On  the  Scioto, 
Chillicothe  was  laid  out  in  1796,  and  the  next  year  Franklinton, 
where  Columbus  now  stands.  Athens  on  the  Hocking  was  set- 
tled in  1797  and  Lancaster  in  1800.  While  in  the  Muskingum 
Valley,  Zanesville  was  begun  in  1799  and  Coshocton  in  1802. 38 
Meanwhile  Cleveland  had  been  founded  on  Lake  Erie  at  the 
mouth  of  the  Cuyahoga  in  I796,39  and  Steubenville  on  the  upper 
Ohio  in  i798.40  Thus  the  great  outlines  of  the  future  state  so 
rapidly  filfiled  with  inhabitants  that  on  April  30,  1802  Congress 
passed  an  act  enabling  the  portion  of  the  Northwest  Territory 
between  Lake  Erie  and  the  Ohio  River  to  form  a  state.41  A  con- 
vention assembled  at  Chillicothe  in  November  1802  and  adopted 
a  Constitution,42  and  an  act  of  Congress  approved  April  15, 
1803  recognized  the  State  of  Ohio.43 


"King's  Ohio,  p.  264. 

38  Howe's  Historical  Collections  of  Ohio,  Vol.  I.,  pp.  342,  396,  466 
and  589 ;   Vol.  II.,  pp.  274  and  492. 

39  The  Western  Movement  —  Winsor,  pp.  502-4. 

40  Howe's  Hist.  Coll.  of  Ohio,  Vol.  I.,  p.  964. 

41  Charters  and  Constitutions  — Ben  Perley  Poore,  Vol.  II.,  p.  1453. 
4a  Ibid,  p.  1455. 

"  Ibid,  p.  1464. 


PART  I.     BANKING  IN  OHIO  UNDER 
SPECIAL  CHARTERS.     1803-1843. 


NOTE  ISSUE  BASED  ON  GENERAL  ASSETS. 

(25) 


CHAPTER  I. 
THE  ANTE-INFLATION  PERIOD.     1803-1814. 

Economic  Conditions.  —  During  the  period  preceding  the 
War  of  1812  the  people  of  Ohio  were  occupied  literally  in  get- 
ting out  of  the  woods.  Dense  forests  separated  the  different 
settlements,  delaying  the  social  and  economic  fusion  of  the 
population.  The  barrier  of  the  Alleghanies  cut  them  off  from 
the  markets  of  the  Atlantic  States  except  for  live  stock,  which 
could  be  driven  over  the  mountains  on  foot.  Consequently  the 
occupations  of  the  people  were  mainly  pastoral  or  agricultural. 
Yet  the  very  barriers  which  made  it  hard  to  dispose  of  surplus 
products  and  difficult  and  costly  to  import  merchandise,  etc., 
served  to  hasten  home  manufacturers.  The  towns  on  the  Ohio 
and  its  tributaries  had  the  advantages  of  river  communication 
with  each  other  as  well  as  with  Pittsburg,  Louisville,  and  New 
Orleans,  and  it  was  in  these  centers  that  manufacture  and  com- 
merce first  developed  in  Ohio.  Here  also  naturally  the  first 
banks  operated  in  the  state  were  organized.  It  is  noteworthy 
that  of  the  eight  authorized  banks  organized  in  Ohio  during 
this  period  all  were  located  in  towns  situated  either  on  the  Ohio 
or  its  tributaries. 

Early  Manufacturing.  —  In  the  early  development  of 
manufacturing  in  Ohio  the  natural  resources  of  the  state  were  of 
great  advantage.  The  hard  woods  of  the  forests  were  utilized 
from  the  beginning.  Desks,  tables,  and  other  furniture  were 
being  manufactured  in  Cincinnati  as  early  as  1800,  and  a  few 
years  later  plow-making  became  an  important  industry  there.1 
Before  steam  navigation  began  on  the  Ohio  in  1811,  Marietta 
was  quite  a  ship  building  point,  sending  to  sea,  it  is  said,  before 
the  War  of  1812,  seven  ships,  eleven  brigs,  six  schooners,  and 
two  gun  boats.2 


io  Manufactures  —  12th  Census  Bulletin  154,  pp.  10  and  11. 
3  King's  Ohio,  p.  308. 

(27) 


28  Ohio  Arch,  and  Hist.  Society  Publications. 

In  1804  the  first  furnace  for  the  manufacture  of  iron  in 
Ohio  was  established  in  the  Mahoning  Valley.3  And  in  1805  a 
paper  mill  was  built  on  Little  Beaver  Creek  in  the  eastern  part 
of  the  state.4 

Zanesville,  with  its  falls  giving  water  power,  soon  developed 
manufacturing.5  The  abundance  of  clay  suitable  for  making 
coarse  pottery  and  the  difficulty  of  obtaining  such  products  from 
the  Atlantic  Coast  region  early  led  the  farmers  of  the  Mus- 
kingum  region  to  begin  the  manufacture  of  pottery  from  the 
clay  on  their  farms  to  supply  the  settlements  west  of  the  Alle- 
ghanies.  These  products  were  sent  down  the  Muskingum  to 
markets  on  the  Ohio  River  and  even  to  New  Orleans.6 

Every  year  at  the  opening  freshets,  large  quantities  of  flour, 
bacon,  pork,  whiskey  and  the  fruits  of  the  country  adjacent  to 
the  streams  were  taken  in  flat  boats  to  New  Orleans  and  the 
intermediate  markets.  The  starting  of  these  fleets  every  year 
was  a  spectacle  of  great  interest  at  the  towns  on  the  Muskingum, 
the  Scioto,  and  the  Miami.7 

Besides  the  towns  mentioned  above,  Steubenville,  Lancaster, 
Chillicothe,  and  Dayton  were  important  towns  for  manufactures 
in  those  days.  In  1810  the  manufactures  of  the  state  were  es- 
timated to  amount  to  nearly  $2',ooo,ooo,8  but  they  were  chiefly 
in  the  southern  part  of  the  state.  The  northwest  was  still  Indian 
country,  while  the  northeast  in  general  did  not  acquire  much 
commercial  importance  until  the  opening  of  the  Erie  Canal  and 
the  beginning  of  the  Ohio  Canal  in  1825,  although  Warren  and 
Youngstown  both  on  the  Mahoning  River,  early  became  import- 
ant towns  from  their  proximity  to  Pittsburg  and  their  location 
on  the  trade  route  from  there  to  Detroit. 

The  Miami  Country.  —  The  most  populous  and  flourish- 
ing part  of  the  state  at  that  time  was  at  the  southwest,  in  the 
broad  and  fertile  expanse  of  the  Miami  Valley.  With  this  im- 


3  Ohio  Manufactures  —  12th  Census  Bulletin  154,  p.  7. 

4  Ibid,  p.  11. 

5  King's  Ohio,  p.  339. 

'Location  of  Industries  —  12th  Census  Bulletin  244,  p.  18. 

'King's  Ohio,  p.  307. 

8  Valley  of  the  Mississippi  —  Timothy  Flint,  p.  406. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      29 

mense  agricultural  back  country  and  its  advantageous  location  on 
the  Ohio  River  apposite  the  mouth  of  the  Licking  River,  Cincin- 
nati easily  gained  an  ascendancy  which  made  it  the  leading  city 
in  the  West  for  many  years. 

In  1790  the  population  of  the  Miami  Country  was  not  over 
2,000.  In  1800  it  was  about  15,000.  In  1810  the  single  county 
of  Hamilton  contained  15,258,  and  the  Miami  Country  about 
70,000,  or  one-fourth  of  the  whole  population  of  the  state.  By 
1815  this  had  increased  to  about  ioo,ooo.9  In  this  important 
region  agriculture  and  stock  raising  advanced  rapidly.  The 
fertile  soil  produced  immense  crops  of  wheat  and  corn,  and 
scores  of  grist  mills  turned  the  wheat  into  flour.  The  corn  was 
utilized  largely  in  feeding  hogs,  though  many  distilleries  flour- 
ished throughout  the  region,  where  the  farmers  turned  their 
surplus  corn  into  whiskey.  Much  of  this  whiskey  and  flour,  to- 
gether with  the  pork,  bacon,  and  lard  prepared  on  the  farms  in 
winter,  found  its  way  to  Cincinnati,  there  to  be  shipped  by  the 
Ohio  and  Mississippi  rivers  to  New  Orleans.  As  early  as  1803 
whiskey,  beef  and  pork,  and  lumber  and  staves  were  shipped 
from  Cincinnati  to  New  Orleans  by  water.10  It  was  in  connec- 
tion with  this  river  traffic  of  Cincinnati  that  the  first  bank  in 
Ohio  was  organized. 

The  Miami  Exporting  Company.  —  The  enterprising 
citizens  of  the  Miami  Country  were  quick  to  recognize  the  advan- 
tages of  association  under  state  authority  in  the  transaction  of 
business.  Almost  as  soon  as  the  State  of  Ohio  was  admitted 
into  the  Union,  Martin  Baum,  a  prominent  Cincinnati  mer- 
chant,11 with  several  of  his  business  associates,  organized  a  com- 


9  Picture  of  Cincinnati   (1815)  —  Drake,  p.  169. 

"Ohio  Manufactures  —  12th  Census  Bulletin,  No.  154,  pp.  8  and  9. 
The  distillation  of  liquors  in  Ohio  has  always  been  greatest  at  Cincinnati, 
where  it  is  favored  by  the  large  corn  production  of  Ohio,  Kentucky,  and 
Indiana.  In  1810,  however,  distilleries  were  reported  in  every  one  of  the 
36  counties  of  the  state,  producing  in  all  1,212,266  gallons  of  whiskey. — 
12th  Census  Bulletin,  No.  154,  p.  8. 

11  The  Inquisitor  and  Cincinnati  Advertiser,  Oct.  19,  1819.  Martin 
Baum,  of  high  German  parentage,  early  became  active  in  manufacture 
and  trade  in  Cincinnati  and  was  most  influential  in  attracting  German 
immigration  to  that  city. 


30  Ohio  Arch,  and  Hist.  Society  Publications. 

pany  to  facilitate  trade,  and  applied  to  the  Legislature  for  a 
charter.  As  a  result  the  State  Legislature  at  its  first  session 
incorporated  The  Miami  Exporting  Company  on  April  15, 
1803. 12  The  original  object  of  this  company  was  the  exporta- 
tion of  agricultural  produce,  chiefly  to  New  Orleans,13  and  bank- 
ing, if  purposed  at  all,  was  a  secondary  consideration.14  Its 
charter,  however,  permitted  the  issue  of  notes  payable  to  bearer 
and  assignable  by  delivery  only ;  and  the  company,  which  began 
business  operation  in  1804,  was  soon  exercising  the  powers  of 
banking.15  It  issued  bills  and  redeemed  them,  not  in  specie, 
but  in  the  notes  of  other  banks.16  Thus  the  Miami  Exporting 
Company  became  the  first  bank  in  Ohio,  and  perhaps  the  second 
west  of  the  Alleghanies. 

The  first  paper-issuing  institution  west  of  the  mountains, 
the  Lexington  Insurance  Company  incorporated  in  1802,  is  said 
to  have  obtained  banking  privileges  surreptitiously.  And  Gouge 
in  his  history  of  early  banking  in  the  United  States  suggests 
that,  as  the  title  of  the  Miami  Exporting  Company  indicates  that 
it  was  established  ostensibly  for  commercial  purposes  of  another 
nature,  perhaps  banking  privileges  were  obtained  for  it  sur- 
reptitiously, as  in  the  case  of  the  Lexington  Insurance  Com- 
pany the  year  before.17  Be  this  as  it  may,  the  Miami  Exporting 
Company  almost  from  the  first  did  a  banking  business,  opening 
an  office  in  Cincinnati  for  that  express  purpose.  In  fact  on 
March  i,  1807  the  bank  went  into  full  operation,  all  commercial 
projects  having  previously  been  relinquished.18 


"Laws  of  Ohio,  Vol.  I.  (1803),  pp.  126-136. 

"A  Picture  of  Cincinnati  —  Daniel  Drake   (1815),  p.  150. 

"Banking  and  Resources  of  Ohio  —  Thomas  H.  Wilson.  (In 
World's  Congress  of  Bankers  and  Financiers),  p.  533. 

15  Laws  of  Ohio,  Vol.  I.  (1803),  p.  135,  Sec.  16.  Report  of  Judiciary 
Committee,  Jan.  7,  1837,  on  the  resolution  of  inquiry  into  the  authority 
by  which  the  Miami  Exporting  Company  exercised  the  powers  of  a  bank- 
ing corporation.  —  Ohio  H.  R.  Jour.  1837,  pp.  188-195. 

18  History  of  Banking  — J.  J.  Knox,  p.  668. 

"A  Short  History  of  Paper  Money  and  Banking  in  the  United 
States  — Wm.  Gouge  (Cobbett's  Ed.),  p.  88. 

"Picture  of  Cincinnati  in  1815  — Drake,  p.  150. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      31 

The  charter  of  the  Miami  Exporting  Company  was  granted 
for  a  period  of  forty  years,  and  provided  for  a  board  of  eleven 
directors,  who  were  to  be  chosen  annually  and  one  of  whom 
was  to  be  elected  president.  The  authorized  capital  stock  of  the 
company  was  fixed  at  $500,000,  divided  into  shares  of  $100 
each,  payable  $5  in  cash  at  the  time  of  subscribing,  and  $45  in 
produce  and  manufactures  such  as  the  president  and  directors 
would  receive  during  the  first  year,  and  the  remaining  $50  in 
produce  and  manufactures  from  July  to  March  of  the  follow- 
ing year.  The  stockholders  were  to  give  notice  in  writing 
at  the  Company's  office  on  or  before  the  first  day  of  September 
following,  what  kind  of  produce  and  manufactures  and  the  prob- 
able amount  thereof  they  would  deliver,  but  the  president  and 
directors  were  to  designate  the  times  and  places  of  delivery.19 

Not  all  of  the  authorized  capital  was  ever  paid  in.  Gouge 
gives  the  capital  of  this  company  as  $2oo,ooo,20  and  this  agrees 
with  the  amount  stated  in  the  list  of  Ohio  banks  organized  be- 
fore 1812  published  in  the  first  issue  of  the  Bankers'  Magazine.21 
In  1811,  however,  the  directors  authorized  the  sale  of  a  large 
number  of  additional  shares  of  the  capital  stock  of  the  company, 
and  November  28  of  that  year  they  issued  a  notice  offering  these 
to  purchasers  with  the  privilege  of  taking  them  either  at  $102, 
to  be  paid  at  the  time  of  subscribing,  or  at  $104,  to  be  paid  one- 
fourth  at  the  time  of  subscribing,  one-fourth  in  six  months,  one- 
fourth  in  twelve  months,  and  the  remaining  one-fourth  when  re- 
quired by  the  board,  the  subscribers,  however,  to  have  at  least 
thirty  days'  notice.22  And  Daniel  Drake,  writing  in  1815,  says 
that  the  capital  consisted  of  $450,000  paid  in  by  190  persons,  the 
number  of  stockholders  at  that  time.23 

It  is  probable,  however,  that  not  all  of  this  $450,000  was 
ever  actually  paid  in  cash.  It  was  a  common  practice  among 


19  Banking  and  Resources  of  Ohio  —  Wilson,  p.  534.     Report  of  the 
U.  S.  Comptroller  of  the  Currency,  1876,  p.  XXV.     History  of  Banking 
in  the  U.  S.  — H.  F.  Baker   (In  Bank  M.ll  :165  Sept.  '56) 

20  A    Short    History   of    Paper    Money   and   Banking  —  Wm.    Gouge 
(Cobbett's  Edition),  p.  88. 

21  Bankers'  Magazine,  Vol.  I.,  p.  119. 

22  The  Ohio  Centinel,  Dayton,  Ohio,  Jan.  9,  1812. 

23  Picture  of  Cincinnati   (1815)  —  Drake,  p.  150. 


32  Ohio  Arch,  and  Hist.  Society  Publications. 

banks  of  the  period  following  the  War  of  1812  to  accept  what 
were  known  as  stock  notes  in  payment  of  subscriptions  for 
stock ;  that  is,  after  making  the  first  payment  or  two  in  cash,  the 
subscriber  would  be  permitted  to  pay  the  remainder  of  his  sub- 
scription with  his  own  note,  which  would  later  be  redeemed,  if 
at  all,  with  dividends  received  from  the  bank.24  It  is  likely  that 
a  considerable  portion  of  the  Miami  Exporting  Company's  $450,- 
ooo  capital  stock  was  paid  in  that  way,  especially  the  later  issues 
of  that  stock.  A  published  balance  sheet  of  the  company  under 
date  of  May  n,  1821  gives  the  amount  of  money  paid  by  the 
stockholders  on  their  shares  as  $379, 178.25 

The  Miami  Exporting  Company  continued  in  the  undis- 
turbed employment  of  its  banking  powers  without  question  until 
1822,  when  it  became  unable  to  progress  with  its  business.  From 
that  time  until  1834  it  engaged  in  no  business  but  such  as  was 
required  for  adjusting  and  closing  its  debts  and  credits  and 
maintaining  its  corporate  organization.  In  1834,  however,  it  was 
resuscitated,  and  provision  was  made  for  the  payment  of  its 
stock,  the  liquidation  of  its  debts,  and  the  redemption  of  its 
outstanding  notes.26  It  then  recommenced  the  business  of  bank- 
ing, but  was  finally  compelled  to  wind  up  its  affairs  before  the 
termination  of  its  charter  in  1843. 27 

The  Bank  of  Marietta,  —  While  the  Miami  Exporting- 
Company  was  the  first  to  exercise  the  powers  of  banking  in  Ohio, 
and  continued  to  do  a  banking  business  for  many  years,  yet,  as 
we  have  seen,  it  was  not  originally  chartered  as  a  bank,  properly 
speaking.  The  first  regular  bank  incorporated  in  Ohio  was  es- 
tablished at  Marietta.  It  is  not  known  just  when  it  began  busi- 
ness, but  its  application  for  a  charter  in  February  1808  indicates 
that  it  was  already  an  existing  association.28  A  charter  was 


24  Report  of  Sec'y  of  Treas.  Wm.  H.  Crawford,  Feb.  12,  1820. 

26  Liberty  Hall  and  Cincinnati  Gazette,  May  12,  1821.  Gallatin  in 
1831  listed,  among  the  banks  which  had  failed  since  1811,  the  Miami  Ex- 
porting Company  with  a  capital  stock  of  $468,966.  See  p.  132. 

26  Ohio  House  Journal,  1837,  pp.  189-191. 

27  The    Miami    Exporting    Company    failed    Jan.    10,    1842  —  Knox's 
History  of  Banking,  p.  676. 

28  A  History  of  Banking  in  all  the  Leading  Nations,  Vol.  I.,  p.  59. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      33 

granted  to  the  Bank  of  Marietta  on  February  10,  i8o8.29  The 
main  provisions  of  the  law  incorporating  this  bank  were  the 
following : 

1.  Charter  to  continue  until  1818. 

2.  Capital  stock  not  to  exceed  5,000  shares  of  $100  each. 

3.  Directors  seven  in  number,  to  be  elected  annually  by  the 
stockholders  voting  in  person  or  by  proxy  in  proportion  to  num- 
ber of  shares  held.     Directors  must  be  stockholders  and  resi- 
dents of  the  county.     Vacancies  to  be  filled  by  election  by  re- 
maining directors. 

4.  General  meeting  of  the  stockholders  at  the  call  of  the 
directors,  but  six  weeks'  notice  must  be  given  in  some  newspaper. 

5.  Stock   transferable   on    the    books   of    the    company   if 
holder's  debts  to  the  bank  be  paid  first. 

6.  Bank  bills  obligatory  and  of  credit  assignable  by   en- 
dorsement. 

7.  Power  to  hold  real  estate  for  convenient  transaction  of 
its  business ;  also  bona  fide  mortgages  and  property  conveyed  for 
a  debt. 

8.  Trading  in  merchandise  forbidden. 

9.  Debts  must  not  exceed  three  times  its  capital,  stock. 

10.  Interest  allowed  on  loans  not  over  6%. 

11.  State    could    subscribe    up   to   one-fifth    of    the   capital 
stock. 

It  will  be  noticed  from  the  above  that  while  a  limit  was 
fixed  to  the  amount  of  capital  stock  that  could  be  issued,  restric- 
tions placed  on  the  transfer  of  that  stock  and  on  the  holding  of 
real  estate,  and  limitations  specified  as  to  debts  contracted  and 
interest  rates  charged,  yet  no  restriction  appears  as  to  note 
issue  and  no  provision  as  to  note  redemption.  The  evils  of 
unrestricted  note  issue  had  not  yet  become  apparent  to  the  Ohio 
Legislature. 

The  Bank  of  Chillicothe.  —  On  Feb.  18,  1808,  a  week 
after  incorporating  the  Bank  of  Marietta,  the  State  Legislature 
chartered  the  Bank  of  Chillicothe  with  a  capital  of  $100,000. 


30 


29 Laws  of  Ohio,  Vol.  VI.  (1808),  p.  41. 

80  Laws   of  Ohio,  Vol.  VI.,  p.  83.     This  capital  stock  could  be  in- 
creased to  $500,000  by  a  two-thirds  vote  of  the  stockholders. 

3 


34  Ohio  Arch,  and  Hist.  Society  Publications. 

This  bank  was  located  at  the  town  of  Chillicothe  and  the  pro- 
visions of  its  charter  were  much  the  same  as  those  of  the  Bank 
of  Marietta,  except  that  the  shares  of  capital  stock  were  pay- 
able one-tenth  when  subscribed  and  one-tenth  at  the  end  of 
each  calendar  month  thereafter  until  all  were  paid,  and  that  no 
person,  firm,  or  company  could  hold  over  forty  shares,  nor  sub- 
scribe for  more  than  five  shares  in  one  day.31 

Another  clause  of  the  charter  provided  that  the  bank 
should  not  emit  notes  payable  in  bills  of  credit  of  the  state  of 
Ohio.  Here  we  see  an  early  attempt  of  the  legislature  to  regu- 
late to  some  extent  the  redemption  of  the  notes  issued  by  the 
bank.  In  those  days  specie  was  a  scarce  article  in  Ohio,  and  the 
State  Treasury  was  at  times  in  an  embarrassed  situation  for 
funds  to  meet  the  incidental  expenses  of  the  state  government. 
Sometime  before  this  an  act  had  been  passed  by  the  legislature 
requiring  the  auditor  of  the  state  to  issue  bills  of  specific 
amounts  payable  at  the  treasury  with  interest.  These  had  as- 
sisted in  upholding  the  credit  of  the  state  and  created  a  kind  of 
circulating  medium  which  in  some  degree  supplied  the  place  of 
specie.32  Apparently  the  banks  were  taking  advantage  of  these 
bills  to  use  instead  of  specie  in  redeeming  their  notes. 

The  Bank  of  Steubenville. —  Attention  has  already  been 
'Called  to  the  influence  exerted  by  river  valleys  in  determining 
the  location  of  Ohio's  early  population  and  the  growth  of  its 
•early  trade  centers.  And  it  will  be  noticed  that  of  the  three 
banks  already  mentioned,  the  first  was  in  the  Miami  Valley,  the 
second  at  the  mouth  of  the  Muskingum,  and  the  third  on  the 
Scioto,  the  three  principal  tributaries  of  the  Ohio  in  the  state. 
The  fourth  bank  chartered  in  the  state  was  established  at  Steu- 
benville on  the  upper  -course  of  the  Ohio  River  itself. 

The  Bank  of  Steubenville  was  chartered  by  the  State  Legis- 
lature on  February  15,  1809  w^tn  an  authorized  capital  stock  of 
$ioo,ooo.33  The  number  of  directors  was  fixed  at  nine,  but  they 


81  The  number  of  directors  was  increased  from  seven  to  nine  by  an 
act  of  the  legislature  on  Dec.  31,  1808  — Laws  of  Ohio,  Vol.  VII.,  p.  68. 

82 Auditor's  Report,  Dec.  4,  1811  — Laws  of  Ohio,  Vol.  X.  (1812). 
Also  Auditor's  Report  of  Dec.  9,  1812,  p.  4. 

"Laws  of  Ohio,  Vol.  VII.   (1809),  p.  169. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      35 

were  allowed  no  pay  unless  it  was  allowed  by  a  general  meeting 
of  the  stockholders.  Stockholders .  were  allowed  one  vote  for 
each  share  under  ten,  one  for  each  two  shares  above  ten  up  to 
fifty,  one  for  every  five  shares  above  fifty  and  up  to  one  hun- 
dred, and  one  vote  for  every  ten  shares  held  over  one  hundred. 
Stockholders  resident  in  the  United  States  were  allowed  to  vote 
by  proxy.  After  the  first  election,  shares  had  to  be  held  three 
months  before  the  owner  could  vote.  This  charter  contained 
a  provision  allowing  the  State  to  acquire  stock  in  the  bank,  and 
provided  that  when  the  State  should  own  shares  equal  in  num- 
ber to  one-tenth  of  the  whole  it  should  have  the  privilege  of 
appointing  two  of  the  directors.  If  the  State  should  own  less 
than  one-tenth  of  the  shares,  however,  it  was  to  have  proxy  to 
vote  as  the  other  stockholders. 

Other  Banks  Chartered.  —  After  the  Bank  of  Steuben- 
ville  in  1809  no  more  banks  were  chartered  in  Ohio  until  1812.  In 
1811,  however,  the  charter  of  the  United  States  Bank  expired 
and  Congress  refused  to  recharter  it.  This  left  the  field  free 
for  State  banks,  and  they  were  not  slow  to  take  advantage  of 
the  opportunity.31  From  January  i,  1811  to  the  close  of  1814 
the  number  of  banks  in  the  United  States  increased  from  88  to 
208,  and  their  capital  stock  from  $42,610,601  to  $82,259,590, 
making  an  addition  of  nearly  $30,000,000,  to  the  banking  capital 
of  the  country.35 

In  Ohio  this  movement  became  apparent  at  once.  Several 
unauthorized  banks  were  established  within  the  state  during 
1811,  and,  as  we  have  already  seen,  the  Miami  Exporting  Com- 
pany issued  a  large  additional  amount  of  capital  stock,  which 
was  eagerly  taken  by  the  public,  though  it  was  offered  only  at 
a  premium.36  Early  in  1812  two  more  banks  were  chartered  by 
the  Ohio  Legislature.  A  third  was  incorporated  in  1813,  and 


34  Financial  History  of  the  United  States  —  Davis  R.  Dewey,  p.  144. 
Banks,  Banking  and  Paper  Currencies  —  Hildreth,  p.  64. 

36  Report  of  U.  S.  Comptroller  of  the  Currency,  1876,  p.  XXXV. 

Elliot's  Funding  System,  p.  984  — House  Exec.  Doc.  No.  15,  1st 
Session  28th  Congress.  Considerations  on  the  Banking  and  Currency 
System  of  the  United  States  —  Albert  Gallatin  (1831),  pp.  42  and  44. 

36  See  page  31. 


36  Ohio  Arch,  and  Hist.  Society  Publications. 

another  in  1814.  Thus  from  1811  to  1814  the  number  of  in- 
corporated banks  in  Ohio  doubled.  During  the  same  period 
their  capital  stock  increased  from  $895,000  to  $i,435,8i9.37 

The  names  of  the  new  banks  chartered  in  Ohio  from  1812 
to  1814,  together  with  their  location,  authorized  capital  stock, 
and  dates  of  charter  are  shown  in  the  following: 

Name.  Location.      Capital  Stock.        Chartered. 

1.  Western  Reserve  Bank..  Warren  $100,000  ..Feb.  20,   1812.38 

2.  Bank  of  Muskingum.. . .   Zanesville    100,000  ..Feb.  21,   1812.38 

3.  Farmers'    &    Mechanics' 

Bank    Cincinnati    200,000  . .  Feb.     5,   1813.40 

4.  Dayton  Manufacturing 

Co Dayton    100,000  ..Feb.   11,   1814.41 

These  banks  were  all  chartered  by  special  acts  of  the  legis- 
lature, and  their  charters  all  extended  until  1818.  The  methods 
of  their  organization  were  about  the  same,  and  the  provisions 
of  their  charters  were  quite  similar.  The  number  of  directors 
varied  from  seven  to  thirteen.  The  charter  of  the  Farmers'  and 
Mechanics'  Bank  contained  a  provision  which  required  that  one- 
third  of  the  thirteen  directors  must  be  practical  farmers  and  the 
same  proportion  practical  mechanics.42 

In  the  case  of  the  Bank  of  Muskingum  occurs  apparently 
the  first  attempt  of  the. legislature  to  prevent  the  paying  ol  divi- 
4gndsjto  stockholders  who  had  not  yet  paid  in  all  their  stock, 
a  clause  irflhat  charter  providing  that  persons "~f ailing  to~pa}Tup 
installments  should  not  be  entitled  to  any  dividend.  In  the 
charter  of  this  bank  also  we  see  the  first  of  the  endeavors  of 
the  legislature  to  restrict  note  issue,  as  another  clause  of  the 
charter  prohibited  the  bank  from  issuing  bills  to  a  greater 


37  Report  of  the  U.  S.  Comptroller  of  the  Currency,  1876,  p.  LXXXV. 
Report  of  U.   S.   Sec'y  of  Treas.  Wm.  H.  Crawford,  Feb.   12,   1820.— 
In  Elliot's  Funding  System,  p.  769. 

3S  Local  Laws  of  Ohio,  Vol.  X.  (1812),  p.  111. 

39  Laws  of  Ohio,  Vol.  X.  (1812),  p.  40. 

40  Laws  of  Ohio,  Vol.  XL  (1813),  p.  79. 

41  Laws  of  Ohio,  Vol.  XII.  (1814),  p.  162. 

"Laws  of  Ohio,  Vol.  XL    (1813),  p.  81.     Picture  of  Cincinnati  in 
—  Drake,  p.  151. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      37 

amount  than  three  times  the  amount  of  capital  stock  paid  in,  and 
made  the  directors  individually  liable  for  any  excess  above  that 
amount.  It  was  also  provided  in  this  charter  that  the  legislature 
might  tax  the  capital  stock  of  the  bank.43 

Unauthorized  Banking.  —  In  addition  to  the  foregoing 
banks  incorporated  by  the  State  Legislature  before  1815,  there 
were  various  other  concerns  in  Ohio  carrying  on  banking  business 
without  charters.  In  1807  a  company  known  as  the  Alexandrian 
Society  of  Granville  had  been  chartered  by  the  legislature  for 
literary  purposes.44  It  later  engaged  in  the  business  of  banking, 
though  no  such  privilege  was  granted  in  its  charter. 

A  bank  was  opened  at  Delaware  as  early  as  1812,  but  fail- 
ing to  get  a  charter  the  next  winter  it  wound  up  its  affairs,  re- 
deeming all  its  notes.  During  the  same  year  a  swindling  con- 
cern called  the  Scioto  Exporting  Company  was  started  in  this 
town  by  a  gang  of  counterfeiters.  It  was  destroyed  by  the  citi- 
zens, however,  before  it  could  get  a  large  amount  of  paper 
afloat.45  Various  other  unincorporated  banks  were  established 
in  the  state  after  the  expiration  of  the  charter  of  the  first  United 
States  Bank  in  1811,  some  of  which  were  quite  successful.46 

Several  of  the  chartered  banks  had  existed  for  some  time 
as  unauthorized  banks  before  applying  for  charters,  as  in  the 
case  of  the  Bank  of  Marietta.  Thus,  too,  the  Farmers'  and 
Mechanics'  Bank  had  been  established  in  1812,  the  year  before 
it  was  incorporated.47  Quite  a  number  also  of  unauthorized 
banks  existed  during  the  latter  part  of  this  period  which  were 
later  given  charters  by  the  legislature  in  1816.  Thus  the  Zanes- 
ville  Canal  and  Manufacturing  Company,  which  was  chartered 
in  1816,  was  originally  organized  in  1812  to  build  a  dam  across 
the  Muskingum  River  and  for  manufacturing  and  other  pur- 
poses.48 It  later  exercised  banking  powers,  however,  and  was 
probably  the  bank  referred  to  by  Dr.  John  Cotton  when  he  vis- 


43  Laws  of  Ohio,  Vol.  X.  (1812),  pp.  40-51. 

"Laws  of  Ohio,  Vol.  V.   (1807),  p.  62. 

45  Howe's  Historical  Collections  of  Ohio,  Vol.  L,  p.  553. 

48  See  page  35. 

47  Picture  of  Cincinnati  in  1815  —  Drake,  p.  151. 

48  Laws  of  Ohio,  Vol.  XIV.   (1816),  p.  293. 


38  Ohio  Arch,  and  Hist.  Society  Publications. 

ited  Zanesville  in  1815  and  found  an  "active  enterprising  popula- 
tion of  two  or  three  hundred  busy  in  digging  a  short  canal 
through 'rock  for  water  power  and  factories,  to  pay  the  expense 
of  which  a  private  bank  was  issuing  bills  which  were  in  good 
credit".49  Another  unauthorized  concern,  the  Bank  of  Cincin- 
nati, was  founded  in  1814,  with  shares  at  $50  each,  8,800  of 
which  had  been  sold  to  345  persons  by  1815,  though  it  had  not 
yet  obtained  a  charter.  It  was  governed  by  twelve  directors 
chosen  annually.  Its  notes  in  1815  were  in  excellent  credit  and 
the  dividends  had  advanced  from  6  to  8%  during  the  first  year.5& 
This  bank  also  obtained  a  charter  in  1816. 

Many  other  unauthorized  banks  were  established  in  the 
state  during  the  years  1811  to  1814,  and  by  the  close  of  the  latter 
year  the  large  amount  of  notes  issued  by  these  institutions  had 
become  a  matter  of  concern  to  the  legislature.  On  February 
8,  1815  the  legislature  passed  an  act  to  raise  revenue  from  banks 
and  to  prohibit  the  unauthorized  issue  of  circulating  notes.51 
This  law,  besides  levying  a  tax  of  4%  on  the  annual  dividends 
of  the  banks,  prohibited  the  issue  of  notes  by  any  one  not  author- 
ized by  law  under  a  penalty  of  a  year's  imprisonment  and  a  fine 
of  not  over  $5,000,  but  until  January  i,  1818  it  was  not  to  apply 
to  banks  which  began  business  before  January  i,  i8i5.52  It  was 
the  first  of  a  long  list  of  laws  passed  by  the  Ohio  legislature 
against  unauthorized  bank  notes.  In  fact  it  marked  the  begin- 
ning of  a  war  against  unauthorized  banks  and  bank  currency 
which  Ohio  carried  on  vigorously  but  with  little  success  during 
the  continuance  of  state  banks  issuing  currency.53 

Condition  of  Ohio  Banks  prior  to  1815.  —  No  statistics 
are  available  regarding  loans  and  discounts,  note  circulation,  specie 
on  hand,  profit  and  loss,  etc.,  of  the  banks  during  this  period. 
It  is  known,  however,  that  the  profits  of  the  banks  were  consid- 
erable. As  noted  above,  the  dividends  of  the  Bank  of  Cincinnati 


49  King's  Ohio,  p.  339. 

50  Picture  of  Cincinnati  in  1815  — Drake,  p.  151. 
61  Laws  of  Ohio,  Vol.  XIII.  (1815),  p.  152. 

52  Ibid. 

63  A  History  of  Banking  in  All  the  Leading  Nations,  Vol.  I.,  p.  91. 
History  of  Banking  —  John  Jay  Knox,  p.  669. 


Banking  and  Currency  in  Ohio  Before  the  Chnl  War.      39 

are  said  to  have  risen  from  6  to  8%  during  the  first  year  of  its 
existence.  According  to  Drake,  the  dividends  of  the  Miami  Ex- 
porting Company  for  several  years  previous  to  1815  had  fluc- 
tuated between  ten  and  fifteen  per  cent.54  And  the  Auditor  of 
State  in  1813  suggested  to  the  legislature  the  advisability  of  in- 
vesting a  portion  of  the  surplus  of  the  state  treasury  in  some  of 
the  most  productive  bank  stocks,  where  it  would,  he  considered, 
yield  an  annual  income  of  ten  or  twelve  per  cent.55 

Undoubtedly,  also,  the  banks  of  Ohio  chartered  before  1815 
maintained  excellent  credit  throughout  this  period.56  They  were 
frequently  of  service  both  to  the  state  and  to  the  national  gov- 
ernments. When  the  legislature,  desiring  to  assume  the  amount 
of  direct  tax  levied  on  the  state  by  the  United  States  for  the 
year  1814-15,  asked  the  banks  as  to  loans,  it  promptly  received 
from  six  of  the  banks  offers  aggregating  $220,000,  and  verbal 
assurance  of  a  much  larger  amount.57  During  the  war  the  Ohio 
banks  made  large  issues  to  aid  the  military  operations  of  the 
country;  and  when  the  credit  of  the  government  funds  was  so 
much  depreciated  as  greatly  to  embarrass  the  public  service, 
these  banks  liberally  supplied  the  public  agents  with  credit.58 

All  this  led  to  the  issue  of  large  sums  of  paper,  and  there 
was  undoubtedly  considerable  inflation  in  Ohio  at  that  time;  but 
there  was  also  plenty  of  specie  in  the  state,  and,  notwithstanding 
the  fact  that  within  a  month  after  the  capture  of  Washington 
in  August  1814  all  the  banks  of  the  country  suspended  except 
those  of  New  England  and  a  few  in  the  West  and  South,59  the 
Ohio  banks  maintained  specie  payment  until  within  a  month  or 


64  Picture  of  Cincinnati  in  1815  —  Drake,  p.  150. 

55  Ohio  State  Auditor's  Report,  Dec.  8,  1813,  p.  3. 

56  Legislative  Report  on  Situation  and  Condition  of  Banks  —  House 
Journal,  1820,  p.  415. 

"Governor    Worthington's    Message    of    Jan.    31,    1815,    Respecting 
Banking  Institutions.  —  Senate  Journal,  1815,  p.  311. 

58  Ohio  House  Journal,  1819-20,  p.  415. 

59  Financial  History  of  the  United  States  —  Dewey,  p.  145.     Money 
and  Banking  —  Horace  White,  p.  270.    A  History  of  American  Currency 
—  Wm.  G.  Sumner,  pp.  62  and  68. 


40  Ohio  Arch,  and  Hist.  Society  Publications. 

two  of  the  close  of  the  war.60  They  were  finally  compelled  in 
self  defense  to  stop  paying  specie  about  January  i,  1815,  and 
then  it  was  not  long  until  the  mania  for  inconvertible  paper 
money,  already  raging  in  the  Middle  Atlantic  States,  passed  over 
the  Alleghanies  into  Ohio  and  Kentucky.61 


60  Ohio  Republican   (Dayton,  O.),  Feb.  6,  1815.    A  Short  History  of 
Paper  Money  and  Banking  —  Wm.  Gouge  (Cobbett's  Edition),  p.  88. 

61  Ibid,  pp.  88  and  89.     Elliot's  Funding  System,  p.  1106. 


CHAPTER  II. 
THE  INFLATION  PERIOD  OF  1815-1817. 


Increase  of  Population.  —  From  1810  to  1820  the  popula- 
tion of  the  United  States  increased  from  7,239,881  to  9,638,453, 
a  gain  of  nearly  33^%.  Of  the  five  great  divisions  of  the  coun- 
try the  North  entral  Division  during  this  decade  showed  the 
most  rapid  growth,  having  increased  from  293,169  in  1810  to 
859,305  in  1820,  a  gain  of  566,136  or  193.1%.  More  than  three- 
fifths  of  this  increase  in  the  population  of  the  North  Central 
Division  was  due  to  the  gain  in  Ohio  alone,  her  population  in- 
creasing from  230,760  in  1810  to  581,434  in  1820,  a  gain  of 
350,674  or  151.9%. 

Of  Ohio's  neighbors,  Indiana  was  growing  rapidly,  having 
a  population  in  1820  of  147,178,  but  Missouri's  population  in 
that  year  was  only  66,586  and  that  of  Illinois  55,211,  while  Michi- 
gan in  1820  contained  only  8,896  inhabitants.  In  1810  Tennes- 
see had  more  inhabitants  than  Ohio,  and  Kentucky  had  nearly 
twice  as  many;  but  by  1820  Ohio  had  outstripped  them  both, 
her  gain  in  population  during  the  ten  years  period  being  con- 
siderably more  than  both  of  theirs  combined.1  Most  of  Ohio's 
gain  during  this  decade,  however,  was  made  before  1817. 

Besides  a  large  natural  increase  in  her  population  during 
this  period,2  Ohio,  from  her  position,  was  enabled  to  receive  and 
retain  the  flower  of  the  emigration  which  was  then  proceeding 
from  all  quarters  to  the  Northwest.  The  geographical  relations 
of  the  Atlantic  States  inclined  their  people  to  the  sea,  but  the 
Embargo  Act  and  other  restrictions  to  trade  down  to  the  War 
of  1812  turned  hundreds  of  their  citizens  toward  the  West. 
"In  the  winter  of  1814,"  says  McMaster,  "the  exodus  from  the 
sea-board  states  became  alarming.  Old  settlers  in  Central  New 
York  declared  that  they  had  never  seen  so  many  teams  and 


"Abstract  of  the  Twelfth  Census,  1900,  p.  33. 

2  Valley  of  the  Mississippi  —  Timothy   Flint,  p.  405. 

(41) 


42  Ohio  Arch,  and  Hist.  Society  Publications. 

sleighs  loaded  with  women,  children,  and  household  goods  travel- 
ing westward  bound  for  Ohio,  which  was  then  but  another  name 
for  the  West."3  Many  more  went  west  during  the  hard  winter 
of  i8i6-i7.4  But  from  1817  up  to  the  time  of  commencing  the 
works  of  internal  improvements  in  1825,  Ohio's  increase  from 
immigration  was  comparatively  at  a  stand.6  Her  most  rapid 
increase  for  the  decade  was  during  the-  speculative  period  fol- 
lowing the  War  of  1812. 

Economic  Conditions.  —  The  dull  times  following  the 
opening  of  the  War  of  1812  and  the  hard  times  at  the  close  of  the 
war,  which  caused  the  large  emigration  from  the  sea-board 
states  to  the  Mississippi  Valley,  were  succeeded  by  a  general  re- 
vival of  commercial  activity.  Ohio  shared  in  the  general  im- 
provement of  business.  The  large  accession  of  population  which 
the  state  received  just  after  the  war  gave  a  new  impulse  to  en- 
terprise of  every  sort.  Excessive  importations  of  foreign  goods 
were  made.  All  kinds  of  improvements  were  projected,  many 
of  which  advanced  with  wonderful  rapidity.  Prices  rose  steadily, 
stimulating  speculation;  and  speculation  in  land,  in  town  sites, 
in  everything  of  which  the  new-comers  stood  in  need  was  car- 
ried to  a  ruinous  excess.  Banks  increased  in  all  parts  of  the 
state  and  supplied  an  abundant  circulating  medium.  This  re- 
moved the  one  obstacle  to  the  wild  speculation  in  which  the 
community  wished  to  join, — it  overcame  the  scarcity  of  money, 
— and  speculation  ran  riot.6 

Lands  rapidly  rose  in  value  and  speculation  in  them  became 
a  raging  epidemic.  This  was  facilitated  by  the  disastrous  credit 
system  the 'United  States  Government  had  adopted  in  the  sale 
of  public  lands.  The  Act  of  Congress  of  May  10,  1800,  which 
established  within  the  present  limits  of  Ohio  four  district  land 
offices,  —  Cincinnati,  Chillicothe,  Marietta,  and  Steubenville,  — 
the  first  in  the  United  States,  provided  that  the  public  lands 


3  History  of  the  United  States  —  McMaster,  Vol.  IV.,  p.  383. 

4  Rise  of  the  New  West  —  Frederick  J.  Turner,  p.  308. 

5  History  of  Ohio  —  Caleb  Atwater,  p.  349. 

6  A   Preliminary   Sketch  of  the  History  of   Ohio.      (In  the  Revised 
Statutes  of  Ohio  by  Salmon  P.  Chase,  1833,  Vol.  I.     (Valley  of  the  Mis- 
sissippi—Flint, Vol.  I.,  p.  179  (1832). 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      43 

were  to  be  sold  at  $2.00  per  acre  on  the  installment  plan,  a 
credit  of  four  years  being  allowed  with  interest  at  6%  from 
date  of  sale  on  the  last  three  payments.7  Under  this  system  men 
became  loaded  with  land  purchases,  expecting  to  sell  to  immi- 
grants at  a  big  profit.  The  credit  features  of  this  law  were 
not  repealed  until  1820,  and  by  June  20  of  that  year  the  gross 
sales  of  public  lands  in  Ohio  were  8,848,152.31,  acres  amounting 
to  $ 1 7,226, 1 86.95. 8  And  the  increase  in  receipts  from  public 
land  sales  was  paralleled  by  the  increase  in  the  issues  of  bank 
notes.9 

Speculation  and  Inflation  in  the  Mississippi  Valley. — 
These  occurrences,  however,  were  not  confined  to  Ohio.  The  West 
in  general  thought  itself  no  longer  dependent  on  New  York,  Phila- 
delphia, and  Baltimore  for  foreign  goods.  The  steamboat  had 
appeared  on  the  Ohio  and  the  Mississippi,  and  New  Orleans 
was  the  port  of  entry  for  the  Mississippi  Valley.  The  prospect 
of  sudden  commercial  development  joined  to  the  arrival  of  new 
settlers  brought  on  an  era  of  the  wildest  speculation. 

The  new-comers  brought  no  money.  The  old  settlers  had 
but  little.  The  currency  which  had  never  been  more  than  suffi- 
cient for  the  needs  of  the  West,  became  in  the  now  order  of 
things  wholly  inadequate  for  the  wants  of  the  people.  The  cry 
for  money,  especially  for  cheap  money,  for  money  that  could 
be  borrowed  in  large  sums  on  the  wildest  security,  was  heard 
on  all  sides.  Banks  were  multiplied  in  all  the  little  towns  and 
villages  of  the  West.  Their  paper  not  predicated  on  sound  bank- 
ing principles  nor  based  on  capital  answered  the  turn  of  specu- 
lation as  long  as  the  excitement  of  confidence  lasted.10 

For  several  years  scarcely  a  legislature  met  without  es- 
tablishing new  banks.  Ohio  chartered  20,  Indiana  3,  Illinois  2, 
Tennessee  12,  and  Missouri  2.  Missouri  also  issued  loan  cer- 
tificates, and  in  defiance  of  the  Constitution  of  the  United  States 
made  her  paper  legal  tender.  Finally,  Kentucky  in  1818  char- 
tered 46  banks.  The  history  of  these  Kentucky  banks  forms 


TThe  Public  Domain  —  Donaldson,  p.  201. 

8  The  Public  Domain  —  Donaldson,  p.  203. 

•See  page  158. 

10  Valley  of  the  Mississippi  — Flint,  Vol.  I.,  p.  179. 


44  Ohio  Arch,  and  Hist.  Society  Publications. 

one  of  the  most  striking  chapters  in  the  history  of  fiat  money. 
Throughout  the  West  a  flood  of  paper  money  was  issued,  which 
the  people  hurried  to  borrow,  invest,  and  lose.11 

Governor  Worthington  on  the  Subject  of  Banks.  —  The 

inflation  in  the  Mississippi  Valley  began  in  the  latter  part  of  i8i5.12 
In  November  1815  Governor  Worthington  of  Ohio  addressed  a 
letter  to  the  Auditor  of  State  asking  his  opinion  as  to  the  ad- 
visability of  the  State's  holding  stock  in  banks,  and  whether  a 
fund  could  not  thus  be  established  to  save  excessive  taxation.13 
The  Auditor  in  reply  on  December  18,  1815,  called  attention  to 
the  fact  that  the  charters  of  all  but  one  of  the  authorized  banks 
in  the  state  would  expire  in  1818,  and  proposed  that  the  state 
incorporate  as  many  banks  as  might  be  deemed  safe,  the  state 
to  take  one-fifth  of  the  capital  stock.  He  suggested  that  the 
state  might  make  partial  payments  for  this  stock  for  two  years, 
but  in  the  meantime  receive  full  dividends,  which  were  not  to 
be  drawn  from  the  banks  but  to  be  applied  toward  the  payment 
for  the  stock.  At  the  end  of  two  years,  he  continued,  the  amount 
still  due  the  banks  from  the  state  should  bear  interest  at  4%, 
which  should  be  paid  out  of  the  dividends.  He  judged  that  in 
this  way  the  debt  could  be  paid  in  ten  years,  and  advised  that 
all  the  banks  should  make  monthly  reports  to  the  Auditor  of 
their  debts,  credits,  issues,  etc.14 

Governor  Worthington  was  favorably  impressed  with  this 
idea,  and  two  days  later,  in  his  Message  of  December  20,  1815, 
he  declared  that  the  great  increase  of  banks  in  Ohio  and  the 
extraordinary  increase  of  bank  paper  as  a  circulating  medium 
were  matters  requiring  serious  attention,  especially  as  many 
of  these  banks  were  aiding  in  wild  schemes  of  speculation.  He 
stated  that  the  state's  only  reliance  for  revenue  at  that  time  was 
on  a  direct  tax  on  lands,  remarked  that  the  strong  disposition  to 
create  new  banks  indicated  that  bank  stock  yielded  considerable 
profit,  and  expressed  it  as  his  opinion  that  as  the  state  gave 


11 J.  B.  McMaster  in  The  Forum,  Vol.  XIX,  p.  161. 

12  Hist.  Banking  All  Nations,  1 :89. 

13  Ohio  Sen.  Jour.,  1816,  p.  73. 

14  Ohio  Senate  Journal,  1816,  p.  76. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      45 

extraordinary  privileges  to  banks  it  seemed  just  that  they  should 
reciprocate.15 

The  Bonus  Law  of  Feb.  23,  1816.  —  The  state  legislature 
at  once  acted  on  these  suggestions.  On  January  27,  1816, 
it  passed  another  law  prohibiting  the  issue  and  circulation  of 
unauthorized  bank  paper,  which  fixed  a  penalty  of  $1000  for 
acting  as  the  officer  of  a  bank  violating  this  law  and  a  penalty 
of  three  times  the  amount  of  the  bills  or  notes  issued  by  any  un- 
incorporated bank,  made  all  contracts  with  such  banks  void,  and 
provided  that  no  action  could  be  maintained  on  any  bill  or  note 
of  such  banks.16  This  law  was  not  to  apply  to  incorporated 
banks.  A  month  later,  however,  on  February  23,  1816,  the 
legislature  passed  the  important  banking  law  known  as  the 
"bonus  law,"17  an  act  designed  to  raise  a  state  revenue  from 
banks  and  to  prevent  their  future  increase.18 

By  this  law  the  charters  of  the  existing  banks  were  ex- 
tended, and  six  new  banks  were  incorporated  with  a  capital 
stock  of  $100,000  each,  to  go  into  operation  when  600  shares 
of  $100  each  should  be  subscribed.  By  the  same  act  there  were 
also  incorporated  six  of  the  companies  with  wnich  the  state 
had  been  at  war  in  regard  to  unauthorized  banking.19  The  law 
provided  that  each  of  the  banks  thus  incorporated  should  have 
thirteen  directors;  that  its  books  must  always  be  open  to  the  in- 
spection of  directors  and  of  persons  appointed  by  the  legislature  ; 
and  that  its  capital  might  be  increased  to  $500,000.  Each  of 
the  banks,  new  and  old,  was  to  set  off  to  the  state  one  share  in 
twenty-five  of  its  capital  stock  by  September  i,  1816,  and  to 
continue  to  do  so  as  new  stock  was  created  and  sold.  On  the 
state's  share  ofy  the  stock  the  dividends  were  to  accumulate  until 
the  state  owned  one-sixth  of  the  stock,  after  which  the  dividends 
were  to  be  paid  to  the  state. 


15  Ohio  Senate  Journal,  1816,  p.  73. 
"Laws  of  Ohio,  Vol.  XIV.   (1816),  p.  10. 

"Laws  of  Ohio,  Vol.  XIV.  (1816),  p.  77.    Also  History  of  Banking 
in  the  United  States  —  H.  F.  Baker  (In  Bank  M.  11:163). 

18  Preliminary   Sketch   of   the   History   of   Ohio  — Salmon    P.    Chase 
(In  his  Revised  Statutes  of  Ohio,  1833,  Vol.  I.). 

19  Ohio  Republican   (Dayton,  O.),  Feb.  26,  1816. 


46  Ohio  Arch,  and  Hist.  Society  Publications. 

No  provision  was  made  to  pay  for  the  state  stock,  except 
that  each  bank  was  required  to  set  apart,  annually,  such  a  part 
of  its  profits  as  would  at  the  expiration  of  its  charter  produce 
a  sum  sufficient  for  that  purpose.  The  consideration  for  this 
extraordinary  bonus  was  the  extension  of  the  charters  until 
January  i,  1843  °f  a^  tne  banks  accepting  the  provisions  of  the 
act  by  the  first  Monday  of  September,  1816;  exemption  from 
all  other  state  taxation;  and  a  sort  of  implied  promise  that  no 
other  banks  should  be  created  during  the  term  of  their  charters, 
but  this  was  not  definite.20 

All  of  the  banks  chartered  in  Ohio  before  1816,  except  the 
Miami  Exporting  Company,21  accepted  the  provisions  of  this  law 
before  September  i,  i8i6.22  The  names  and  location  of  the 
banks  enumerated  in  the  act,  the  authorized  capital  stock  of  each, 
and  the  date  when  each  accepted  its  charter  under  this  law 
are  shown  in  the  following  table: 


20  Laws  of   Ohio,   Vol.  XIV.    (1816),   pp.  77   and   109.     History  of 
Banking  —  J.  J.  Knox,  p.  670.     Preliminary  Sketch  of  Ohio  in  Chase's 
Rev.  Stat.,  1833,  Vol.  I. 

21  The  Miami   Exporting  Company  did  not  accept  a  charter  under 
the  act  to  raise  revenue,  etc.  —  Ohio  Sen.  Jour.,  1819,  p.  207. 

22  The  Inquisitor  and  Cincinnati  Advertiser,  Feb.  1,  1820.    Also  Ohio 
Sen.  Journal,  1820,  p.  175. 


Banking  and  Currency  in  Ohio  Before  the  Ciril  War.      47 


BANKS  INCORPORATED  BY  THE  BONUS  LAW  OF  FEBRUARY  23,  l8l6. 


Name. 

Location. 

Authorized 
Capital 
Stock.  35 

Date 
Charter 
Accepted.  38 

New  Banks: 

23  Franklin  Bank  of  Colum- 
bus                                 

Columbus    .  .  . 

$100,000 

Oct     30   1816 

24  Lancaster  Bank  
25  Belmont  Bank  .  .             .  .  j 

Lancaster    .  .  . 
St    Clairsville 

100,000 
100  000 

Aug.   31,  1816'. 
Aug    22   1816 

28  Commercial  Bank  of  Lake 
Erie            

Cleveland    .  .  . 

100  ,  000 

27  Bank  of  Mt.  Pleasant.... 
28  Bank  of  West  Union.... 

Banks  previously  un- 
authorised: 

29  Lebanon  Miami  Banking 
Co 

Mt.  Pleasant. 
West  Union.. 

Lebanon 

100,000 
100,000 

900  000 

Oct.     10,  1816. 
Mar.    18,  1816. 

Aug    24    1816 

80  Bank  of  Cincinnati  
81  Urbana  Banking  Co  

Cincinnati    ..  . 
Urbana    

600,000 
200,000 

Aug.   28,  1816. 
Aug    15    1816 

33  Columbiana  Bank  of  New 
Lisbon 

New  Lisbon 

200  000 

July    12    1816 

83  Farmers',   Mechanics',  & 
Manufacturers'  Bank.  . 
3*  German  Bank  of  Wooster. 

Chillicothe    .  . 
Wooster    

200,000 
200,000 

Aug.    16,  1816. 
i  Aug.    21,  1816. 

Most  of  these  banks  organized  with  but  a  part  of  their 
capital  stock,  and  that  part  was  generally  paid  in  on  the  install- 
ment plan.  Frequently,  however,  the  bank  would  extend  its 
capital  stock  before  all  the  installments  of  the  original  capital 
were  paid  in.  This  is  illustrated  in  the  following  notice  which 
appeared  in  a  Chillicothe  paper  in  i8i6.3T 


23  Laws  of  Ohio,  Vol.  XIV.  (1816),  p.  77. 
80,    "p  81.    "'p.  82.    "p.  86.    "p.  87.    31p.  88. 


85  History    of    Banking    in    Ohio 
11:165). 

36  See  note   (22)    preceding  page. 

87  Chillicothe,  O.,  Supporter,  Aug.  6,  1916.  ? 


Ibid,  p.  78.    26p.  79.    2ap. 
32 p.  89.    83p.  90.    "p.  92. 
H.    F.    Baker    (In    Bank    Mag., 


48  Ohio  Arch,  and  Hist.  Society  Publications. 

"Farmers',  Mechanics'  and  Manufacturers'  Bank  of  Chillicothe. 

May  2,  1816. 

The  stockholders  of  this  bank  are  hereby  notified  that  the  second 
installment  of  the  extended  capital  stock  of  said  bank  will  become  due 
on  the  first  day  of  August  next,  of  $5  on  each  share,  and  the  third 
installment  of  $5  on  each  share  on  the  first  day  of  November  next;  and 
the  fourth  installment  of  the  original  stock  of  $5  on  each  share  will  be 
required  on  the  said  first  day  of  November  next. 

By  Order,    JOHN  P.  FESSENDEN,  Cashier" 

Other  Banks  Chartered  under  Provisions  of  the  Bonus 
Law.  —  For  several  years  after  the  passage  of  the  bonus  law 
of  February  23,  1816,  it  was  treated  as  a  general  banking  law.38 
Seven  more  banks  were  chartered  by  the  Ohio  legislature  in  1816 
and  1817.  Of  these  seven  banks,  five  accepted  the  provisions 
of  the  bonus  law.  One  of  these,  the  Zanesville  Canal  and  Man- 
ufacturing Company,  was  incorporated  the  next  day  after  the 
act  of  February  23,  1816,  was  passed.  The  other  six  were  all 
incorporated  in  December,  1817,  the  last  being  the  Little  Miami 
Canal  and  Banking  Company  which  was  incorporated  on  Dec. 
29,  1817,  with  a  capital  stock  of  $3OO,ooo.39  Besides  author- 
ity to  canalize  the  Little  Miami  River  from  the  Ohio  to  Waynes- 
ville,  this  company  was  given  power  to  carry  on  manufactur- 
ing and  banking.  A  month  after  the  legislature  chartered  this 
batch  of  banks  the  Bank  of  Circleville  was  incorporated  Jan- 
uary 14,  1818.  After  that  date  no  more  banks  were  chartered 
by  the  legislature  for  eleven  years. 

The  following  table  gives  the  name,  location,  and  authorized 
capital  stock  of  each  of  the  banks  referred  to  above  as  incor- 
porated from  February  24,  1816  to  January,  1818,  and  also 
the  date  of  acceptance  of  charter  of  each  of  the  fifive  which  ac- 
cepted the  provisions  of  the  bonus  law : 


38  History  of  Banking  in  All  Nations,  Vol.  I.,  p.  92. 
"Laws  of  Ohio,  Vol.  XVI.   (1817),  p.  43.     History  of  Banking  in 
the  United  States  — H.  F.  Baker  (In  Bankers'  Magazine,  Vol.  XI,  p.  165) 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      49 


OHIO    BANKS    INCORPORATED    FROM    FEBRUARY    24,    l8l6,    TO 
JANUARY    14,    iS'lS. 


Name. 

Location. 

Authorized 
Capital 
Stock.35 

Date 
Charter 
Accepted.  88 

40  Zanesville  Canal  &  Manu- 
facturing Co  

Zanesville  .  .  . 

$250  000 

Aug    29   1816 

41  Farmers'  and  Mechanics' 
Bank  of  Steubenville.  . 
42  Commercial     Bank     of 
Scioto    

Steubenville   . 
Portsmouth    . 

500,000 
100  000 

July    14,  1818. 
Dec     18   1818 

48  Farmers'  Bank  of  Canton 

Canton  

100  000 

July    22    1818 

44  Bank  of  Hamilton  

Hamilton 

300,000 

July    30   1818 

46  Bank  of  Gallipolis  

Gallipolis 

300  000 

Little   Miami    Canal   and 
Banking  Co  

Cincinnati  .  .  . 

300  000  1 

46  Bank  of  Circleville  

Circleville 

300  000 

While  most  of  the  banks  named  above  were  incorporated 
under  the  general  banking  law  of  February  23,  1816,  to  the 
extent  that  they  filed  certificates  accepting  the  provisions  of  the 
bonus  law,  yet  they  were  all  chartered  by  special  •  acts  of  the 
legislature  and  their  charters  varied  considerably  in  details. 
Thus  in  the  charter  of  the  Bank  of  Hamilton  it  was  first  pro- 
vided that  the  capital  stock  should  be  paid  up  in  ''money  of  the 
United  States."  And  in  that  of  the  Bank  of  Gallipolis  it  was 
first  provided  that  the  Governor  should  send  a  commission  to  see 


40  Laws  of  Ohio,  Vol.  XIV.  (1816),  p.  293. 

41  Laws  of  Ohio,  Vol.  XVI.  (1818),  p.  3. 

42  Ibid,  p.   6. 

43  Ibid,  p.  11.     The  Farmers'  Bank  of  Canton  appears  to  have  been 
organized   as   early   as  January,    1815.     Its   articles   of   association,   pub- 
lished under  date  of  January  28,  1815,  provided  for  a  capital  stock  of 
$100,000,   shares  $25,  each,   9   directors,  total  debts   not  to  exceed  three 
times  the  capital  stock  paid  in,  and  a  charter  to  continue  until  January 
1,  1835.  — See  The  Ohio  Patriot,   (New  Lisbon),  Feb.  15,  1815. 

"Laws  of  Ohio,  Vol.  XVI,  (1818),  p.  19. 

45  Ibid.  p.  22. 

46  Ibid.  p.  70. 


50  Ohio  Arch,  and  Hist.  Society  Publications. 

that  $20,000  was  actually  in  hand  half  in  specie  and  half  in 
United  States  Bank  notes  before  the  bank  should  begin.47 

Of  all  the  banks  accepting  charters  under  the  bonus  law  it 
turned  out  that  very  few  complied  with  that  section  of  the  law 
which  required  semi-annual  statements  of  the  financial  condition 
of  each  bank  to  be  made  to  the  Auditor  of  State.  A  committee 
of  the  legislature  appointed  to  examine  the  books  of  the  Auditor 
relative  to  the  returns  of  the  banks  reported  January  15,  1820, 
that  twenty-three  of  them  were  delinquent  in  the  matter  of  re- 
ports; that  they  had  generally  returned  statements  without  re- 
gard to  time;  that  some  had  let  a  whole  year  intervene  between 
reports ;  that  some  had  made  returns  without  the  oath  or  affirma- 
tion of  the  cashier;  while  others  had  made  no  returns  since  they 
went  into  operation.  The  Commercial  Bank  of  Lake  Erie  was 
the  only  one  mentioned  in  the  report  as  having  strictly  and  lit- 
erally complied  with  the  section  of  the  law  requiring  half-yearly 
reports.48 

Statistics  of  Banking  Capital.  —  It  will  be  seen,  therefore, 
that  the  statistics  of  banking  operations  in  Ohio  during  this 
period,  where  attainable  at  all,  are  not  very  complete,  even  for 
the  chartered  banks.  This  lack  of  banking  statistics,  however, 
is  by  no  means  confined  to  Ohio.  The  same  thing  is  true  of 
the  country  generally,  not  only  for  the  years  of  inflation  fol- 
lowing the  War  of  1812,  but  for  the  entire  period  down  to 
i834.49  About  the  only  figures  available  for  the  inflation  period 
are  those  founded  on  applications  made  by  the  banks  to  the 
Treasury  of  the  United  States  under  the  acts  imposing  stamp 
duties. 

The  total  number  of  state  banks  in  the  United  States  in- 
creased from  208  in  1815  to  246  in  1816  while  their  capital  in- 
creased from  $82,259,590  to  $89,822,422. r>u  In  1817  the  total 
banking  capital  in  the  country  (including  that  of  the  .Second 


"History  of  Banking  in  All  Nations.     Vol.  I.  p.  92. 

48  Inquisitor   and   Cincinnati   Advertiser,   Feb.   1,   1820.     Ohio   Senate 
Journal,  1820,  p.  175. 

49  Money  and  Banking  —  Horace  White,  p.  362.     Financial  History 
of  the  United  States  —  Davis  R.  Dewey,  p.  153. 

60  Report  of  U.  S.  Comptroller  of  the  Currency,  1876,  p.  LXXXV. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      51 

United  States  Bank)  was  over  $125,000,000.  The  average  divi- 
dends on  which  stamp  duties  were  paid  during  those  years  were 
about  7$%.  It  was  a  matter  of  general  notoriety  however  that 
the  dividends  actually  paid  exceeded  that  rate.  Assuming  10% 
as  the  average  dividend  paid,  Secretary  Crawford  thought  that 
in  1817  the  actual  capital  paid  in,  instead  of  being  over  $125,- 
000,000,  would  be  found  to  be  about  $94,000,000.  Even  this 
amount  he  considered  too  high  for  the  active  capital.  On  ac- 
count of  the  system  in  vogue  after  the  War  of  1812  of  allowing 
stockholders  permanent  accommodations  at  the  bank,  or  of  per- 
mitting them  to  pay  considerable  portions  of  their  stock  sub- 
scriptions with  their  own  notes,  Mr.  Crawford  estimated  the 
active  capital  of  the  banks  in  1817  as  probably  not  over  $75,- 
ooo,ooo.51. 

So  far  as  known  at  the  Treasury  the  capital  of  the  char- 
tered banks  in  Ohio  increased  from  $1,435,819  to  $2,806,737 
during  the  years  1815  and  1816,  an  increase  of  nearly  100%. 
This  was  the  highest  point  reached  before  the  thirties.  By  the 
end  of  1817  the  amount  had  fallen  to  $2,003,969.  During  the 
same  two  years  the  number  of  chartered  banks  in  Ohio  more 
than  doubled,  increasing  from  8  to  2i.52  As  for  the  unauthor- 
ized banks,  which  continued  to  spring  up  in  all  parts  of  the 
state  during  this  period,  nothing  at  all  is  known  as  to  the  amount 
of  their  capital,  circulation,  loans,  etc.,  nor  even  as  to  their 
number.  The  total  amount  of  notes  issued  by  them,  however, 
was  large  and  added  greatly  to  the  inflation  of  the  currency  in 
Ohio  at  that  time. 

Suspension  and,  Bank  Note  Depreciation.  —  During  most 
of  this  period  there  was  suspension  of  specie  payments  in  all  parts 
of  the  country  except  in  New  England,  and  bank  notes  were  de- 
preciated everywhere.  The  banks  of  New  Orleans  had  sus- 
pended specie  payment  in  the  latter  part  of  April  1814,  and  some 
of  the  banks  in  Maine  also  had  suspended  in  the  early  part  of 
that  year.53  About  the  same  time  there  occurred  a  bank  mania 


"Elliot's   Funding  System,  p.  734. 

5aRept.    of    Secy,    of    Treas.    Wm.    H.    Crawford,    Feb.    12,    1820. 
(Elliot's  Funding  System,  p.  769.) 

"Elliot's  Funding  System,  p.  1106. 


52  Ohio  Arch,  and  Hist.  Society  Publications. 

in  Pennsylvania  during  which  the  legislature  of  that  state  char- 
tered 41  new  banks,  which  were  organized  on  capital  consisting 
chiefly  of  stock  notes.54  August  30,  1814,  the  Philadelphia  banks 
suspended  specie  payments,  followed  within  a  week  or  two,  ac- 
cording to  compact  it  is  said,  by  all  the  other  banks  in  the  Mid- 
dle and  Southern  States.55  The  national  government  in  distress 
for  money  at  that  time  and  at  the  mercy  of  the  banks,  gave 
tacit  consent  to  the  suspension,  which  it  was  said  was  to  con- 
tinue only  during  the  war.56 

The  banks  of  Ohio  and  Kentucky,  however,  maintained  specie 
payments  until  about  the  first  of  January,  1815,  and  the  Bank  of 
Nashville,  Tennessee,  until  July  or  August,  i8i5.57  "It  must 
be  evident  from  this,"  says  Gouge,  "that  if  the  United  States 
Government  had  immediately  compelled  the  banks  of  the  great 
Atlantic  cities  to  redeem  the  pledge  they  had  given  in  the  pre- 
ceding August,  the  western  country  might  have  suffered  but 
little  from  the  suspension  of  specie  payments."58  But  specie 
resumption  did  not  take  place  when  peace  returned.  Instead  of 
redeeming  their  pledge,  "the  banks,  urged  on  by  cupidity,  and 
losing  sight  of  moral  obligation  in  their  lust  for  profit,  launched 
out  into  an  extent  of  issues  unexampled  in  the  annals  of  folly."59 
"The  years  1815,  1816,"  says  Hildreth,  "may  be  well  marked  in 
the  American  calendar,  as  the  jubilee  of  swindlers,  and  the 
Saturnalia  of  non-specie  paying  banks.  Throughout  the  whole 
country,  New  England  excepted,  it  required  no  capital  to  set 
up  a  bank."60 

The  great  over-issue  of  notes  which  resulted  produced  de- 
preciation. Notes  of  the  Philadelphia  banks  were  depreciated 
1 6  to  20%,  those  of  the  interior  of  Pennsylvania  25  to  50%, 
even  the  notes  of  the  New  England  banks  and  a  few  others 


54  Money  and  Banking  —  White,  p.  363. 

55  Elliot's  Funding  System,  p.  1106. 

56  The  History  of  Banks  —  Richard  Hildreth,  pp.  58  and  59. 
"Elliot's   Funding  System,   p.   1106. 

58  A  Short  History  of  Banking  —  Gouge   (Cobbett's  Ed.)   p.  89. 

69  Money  &  Banking  —  White,  p.  363.  (Quoted  from  a  report  to 
the  Pennsylvania  Legislature  in  1820,  by  a  committee  of  which  Mr. 
Raguet  was  chairman.) 

60  Banks,  Banking,  and  Paper  Currencies  —  Richard  Hildreth,  p.  67. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      53 

which  continued  to  pay  specie  were  at  a  discount,  "for",  says 
Gouge,  "nobody  knew  how  long  any  distant  bank  would  con- 
tinue to  pay  specie.  All  the  banks  whose  notes  were  at  a  dis- 
count at  New  York  of  less  than  5  per  cent  were  understood  to 
pay  specie  on  demand."61 

Notes  of  the  chartered  banks  in  Ohio,  which  were  quoted 
at  4  to  5%  discount  in  Philadelphia  in  November  and  December, 
1814,  were  quoted  at  6  to  j%  discount  on  January  2,  1815,  8 
to  10%  discount  on  December  4,  1815,  and  January  i,  1816, 
10  to  12%  on  December  2,  1816,  and  from  12  to  15%  discount 
on  January  6,  i8i7.62  Notes  of  unauthorized  banks  in  Ohio 
were  quoted  in  New  York  at  times  during  this  period  at  a  dis- 
count of  20  to  25 %63. 

The  depreciation  of  the  bank  notes,  which  formed  prac- 
tically the  only  currency  everywhere  except  in  New  England, 
produced  a  great  rise  in  prices64.  Land  in  Pennsylvania  was 
worth  on  the  average  in  1809  $38  per  acre,  in  1815  $150  per 
acre.65.  The  price  of  flour  in  Philadelphia  was  $8.60  per  barrel 
in  1814,  $8.71  in  1815,  $9.78  in  1816,  and  $11.69  m  i8i7.66  In 
the  West  lands  rose  to  double  and  triple  their  value.67  At  Chil- 
licothe,  Ohio,  wheat  was  quoted  on  September  16,  1812  at  62^c 
per  bushel,68  on  August  3,  1816  it  was  75c  and  corn  37!  to  43c,69 
while  on  November  28,  1816  wheat  was  worth  $1.50  and  corn 
5oc.70  The  apparent  value  of  all  kinds  of  property  suddenly 
went  up  and  the  people  imagined  they  were  growing  rich  never 
so  fast.  Meanwhile,  the  banks  were  paying  enormous  divi- 
dends.71 


"Money  and  Banking  —  Wnite,  p.  363. 
82  Elliot's  Funding  System,  p.  1106.     See  Appendix. 
93  History  of  Banking  —  Knox,  p.  669. 
"The  History  of  Banks  —  Hildreth,  p.  60. 
85  A  History  of  American  Currency — Sumner,  p.  80. 
66  Hunt's  Merchants'  Magazine,  Vol.  IV,  p.  286. 
"Valley  of  the  Mississippi  —  Flint,  Vol.  I,  p.  179. 
""Fredonian,   (Chillicothe,  O.),  Sept.  16,  1812. 
89 The  Supporter  (Chillicothe,  O.),  Aug.  6,  1816. 
70 The    Scioto   Gazette   and    Fredonian    Chronicle    (Chillicothe,    O.), 
Nov.  28,  1816. 

"The  History  of  Banks  —  Hildreth,  p.  60. 


54  Ohio  Arch,  and  Hist.  Society  Publications. 

Convention  of  Ohio  Banks  at  Chillicothe.  —  As  long  as 
the  banks  could  issue  notes  without  having  to  redeem  them,  of 
course  they  prospered  and  made  large  dividends.  They  were 
simply  exchanging  their  notes  for  those  of  private  citizens  on 
condition  that  the  latter  should  pay  6  to  10%  interest  and  the 
principal  at  maturity,  whereas  the  banks  paid  neither  interest 
nor  principal.72  As  might  be  expected,  therefore,  the  banks  were 
in  no  hurry  to  resume  specie  payments. 

The  enactment  of  the  law,  April  10,  1816,  establishing  the 
Second  Bank  of  the  United  States,  which  was  expected  to  lead 
the  State  banks  in  the  restoration  of  the  currency  to  a  specie 
basis,  was  soon  afterward  reinforced  by  the  passage  of  a  joint 
resolution  providing  that  after  February  20,  1817,  all  dues  to 
the  United  States  government  must  be  paid  in  legal  currency, 
treasury  notes,  United  States  Bank  notes,  or  notes  of  other 
specie  paying  banks.73 

The  banks  thus  notified  to  get  on  a  specie  paying  basis  if 
they  desired  credit  with  the  government,  were  reluctant,  however, 
to  reduce  their  loans  and  contract  their  circulation  to  that  ex- 
tent. So  in  the  following  summer  the  banks  of  the  Middle 
States  held  a  convention  and  asked  that  the  date  set  for  resump- 
tion-be postponed,  on  the  ground  that  the  United  States  Bank 
could  not  be  organized  by  that  time  and  that  they  wished  its 
aid  in  their  efforts  to  resume.74 

Likewise  the  Ohio  banks  were  ready  with  an  excuse  for 
delaying  resumption.  In  response  to  a  circular  letter  sent  out 
on  July  22,  1816,  by  the  Secretary  of  the  Treasury  of  the 
United  States  inquiring  as  to  resumption,  delegates  from  nearly 
all  the  chartered  banks  of  Ohio  convened  at  Chillicothe  on  Sep- 
tember 6,  1816  for  the  purpose  of  agreeing  on  some  general 
course  respecting  the  resumption  of  specie  payments.  As  the 
result  of  their  deliberations  they  resolved, — that  it  would  not 
be  safe  or  prudent  for  the  Ohio  banks  to  resume  until  the  pay- 
ment of  specie  became  general  at  the  banks  of  the  Atlantic 
cities ;  declared  that  the  Ohio  banks  there  represented  were 


"Money  and  Banking  — White,  p.  364. 

73  Financial  History  of  the  United  States  —  Dewey,  pp.  150  and  151. 

74  Financial  History  of  the  United  States  —  Dewey,  p.  151. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      55 

ready  to  resume  specie  payment;  and  pledged  themselves  to  pay 
specie  for  their  notes  as  soon  as  it  should  be  ascertained  that  the 
payment  of  specie  had  become  general  at  the  banks  of  the  At- 
lantic cities.75  Meanwhile  the  banks  went  on  issuing  more 
stock  and  notes  and  paying  more  dividends.76  In  fact,  as  noted 
elsewhere,  in  1816  the  banking  capital  in  Ohio  reached  the  high- 
est amount  reported  before  the  3o's.  Events  were  occurring, 
however,  which  finally  brought  about  the  general  resumption  of 
specie  payments. 

Branches  of  the  United  States  Bank  in  Ohio  and  Resump- 
tion of  Specie  Payment.  —  Notwithstanding-  the  prophecy  of 
the  state  banks  that  the  United  States  Bank  could  not  be  organ- 
ized so  soon,  it  was  opened  in  January  1817.  That  same  month 
it  persuaded  the  local  banks  of  Philadelphia  to  agree  to  resume 
specie  payments  on  February  21,  and  specie  payments  were  nom- 
inally resumed  on  the  appointed  day.77 

In  January  1817  a  branch  of  the  United  States  Bank  was 
established  at  Cincinnati,  Ohio.78  And  on  February  20,  1817 
two  of  the  Ohio  banks  resumed  specie  payments.79  The  other 
chartered  banks  of  Ohio  resumed  the  payment  of  specie  early 
in  the  spring  of  1817,  after  receiving  assurance  from  the  United 
States  Treasury,  it  is  claimed,  that  time  would  be  given  them 
until  the  ensuing  season  for  the  redemption  of  their  paper,  large 
amounts  of  which  had  been  paid  to  the  government  for  public 
lands  and  for  internal  taxes.80 

The  effect  of  resumption  at  once  became  apparent  in  the  de- 
creased depreciation  of  bank  notes.  Notes  of  the  old  chartered 
banks  of  Ohio,  which  were  quoted  in  Philadelphia  January  6, 


15 The  Ohio  Republican  (Dayton),  Sept.  18,  1816.  Niles  Weekly 
Register,  Vol.  XI,  p.  57,  (Sept.  21,  1816.) 

78 The  Supporter  (Chillicothe,  O.),  Aug.  6,  1816.  The  Scioto  Gazette 
and  Fredonian  Chronicle  (Chillicothe,  O.),  Nov.  28,  1816. 

"  Money  and  Banking  —  White,  p.  364.  That  the  resumption  of 
specie  payment  was  only  nominal  is  indicated  by  the  fact  that  silver  re- 
mained at  a  premium  at  Philadelphia.  See  Appendix,  p.  259. 

78  Bankers'  Magazine,  Vol.  IX,  p.  4. 

"History  of  the  United  States  — J.  B.  McMaster,  Vol.  IV,  p.  317. 

80  Liberty  Hall  and  Cincinnati  Gazette,  Feb.  2,  1819. 


56  Ohio  Arch,  and  Hist.  Society  Publications. 

at  12  to  15%  discount,  rose  to  6%  discount  on  April  7«81     In 
general,  however,  conditions  did  not  improve  much. 

In  October  1817  another  branch  of  the  United  States  Bank 
was  established  in  Ohio,  this  one  at  Chillicothe.82  By  this  time 
the  public  sentiment,  which  had  manifested  itself  in  the  fall  of 
1816  in  efforts  of  the  people  of  both  Cincinnati  and  Chillicothe 
to  secure  branches  of  the  United  States  Bank  in  those 
towns,83  was  beginning  to  turn  against  the  Bank.  A  joint  com- 
mittee of  the  state  legislature,  reported  December  27,  1817  as  to 
the  expediency  of  taxing  the  branches  in  the  state.84  The  report 
was  adverse,  but  the  House  rejected  it  and  adopted  a  substitute 
report  asserting  the  right  of  the  state  to  tax  the  branches,  and 
declaring  the  expediency  of  doing  so  at  once.85  When  the  bill 
imposing  such  a  tax  was  read,  however,  it  was  laid  over  until 
December,  i8i8.86 

Proposition  for  a  State  Bank.  —  On  Dec.  19,  1817,  a  few 
days  before  the  above  report,  the  Ohio  Legislature,  in  a  com- 
mittee of  the  whole  was  considering  the  question  of  passing  a 
general  law  for  incorporating  banks,  and  it  appointed  a  joint 
committe  to  inquire  into  the  expediency  of  inviting  the  char- 
tered banks  to  surrender  their  charters  for  the  purpose  of  unit- 
ing their  capital  stock  into  a  State  Bank  with  branches  at  the 
places  which  had  chartered  banks.87  This  scheme  did  not  then 
materialize,  but  during  the  same  month  six  new  state  banks 
were  incorporated  by  the  legislature  under  the  provisions  of 
the  bonus  law  of  i8i6.88  These  were  followed  a  month  later 
1by  another,  which,  however,  was  the  last  bank  chartered  by  the 
Ohio  legislature  for  a  period  of  eleven  years.89  The  Inflation 
Period  was  about  to  give  way  to  a  period  of  reaction. 


81  See  Appendix  p.  259. 

83  Bankers'  Magazine,  Vol.  IX,  p.  4.  Ohio  Watchman  (Dayton), 
.Oct.  30,  1817. 

83  The  Scioto  Gazette  and  Fredonian  Chronicle,  (Chillicothe),  Nov. 
28,  1816.  Niles  Register,  Vol.  XV,  p.  59,  (Sept.  19,  1818). 

"Ohio  House  Journal,  1818,  p.  144. 

85  Ibid,  p.  308. 

"History  of  the  United  States  —  McMaster,  Vol.  IV,  p.  498. 

*7  Ohio  Senate  Journal,  1818,  p.  87. 

68  See  page  48. 

88  See  page  49. 


CHAPTER  III. 

THE  CRISIS  OF 


"The  Golden  Age  of  the  Western  Country."  —  The  pros- 
perity of  the  speculative  period  continued  in  the  western  coun- 
try until  the  middle  of  1818.  The  flood  of  immigrants  after  the 
war  of  1812  had  increased  the  amount  of  transport  and  given  a 
big  impulse  to  enterprise  of  all  kinds.  Steamboat  building  and 
town  making  advanced  rapidly.  The  sale  of  lands  put  a  lot  of 
money  into  circulation.  Mercantile  importations  filled  the  coun- 
try with  foreign  goods.  Both  town  and  country  partook  of  the 
advantages  of  the  boom.  Industry  was  rewarded,  markets  were 
enlarged,  and  the  products  of  the  country  were  purchased  at 
liberal  prices.  The  farmers  felt  with  as  much  force  as  the 
mechanic  and  the  merchant  of  the  city  the  pleasing  prosperity  of 
those  halcyon  days.1 

The  many  banks  which  had  sprung  into  existence  supplied 
an  abundant  currency.  "If  the  months  of  May,  June,  July,  and 
August,  1815,  were  the  golden  age  of  Philadelphia,"  says  Gouge, 
"the  first  months  of  the  year  1818  were  the  golden  age  of  the 
western  country.  Silver  could  hardly  have  been  more  plentiful 
at  Jerusalem  in  the  days  of  Solomon,  than  paper  money  was 
in  Ohio,  Kentucky,  and  the  adjoining  regions."2  In  Zanesville, 
Ohio,  more  than  30  kinds  of  paper  were  passing  from  hand 
to  hand.  Besides  the  paper  of  the  various  banks,  most  plentiful 
of  all  were  the  "shinplasters"  issued  by  bridge,  turnpike,  and 
manufacturing  companies,  city  and  borough  authorities,  mer- 


1  Valley  of  the  Mississippi  —  Flint,  Vol.  I,  p.  179.    Liberty  Hall  and 
Cincinnati  Gazette,  Jan.  24,  1823.    Preliminary  Sketch  of  Ohio  (In  Chase's 
Revised  Stat.,  1833.) 

2  Gouge's  Journal  of  Banking,  Mar.  30,  1842,  p.  320. 

(57) 


58  Ohio  Arch,  and  Hist.  Society  Publications. 

chants,   tavern   keepers,   and   shoeblacks,   and   ranging  in   value 
from  3c  to  $2.3 

Ohio  was  not  the  only  state  over  supplied  with  banks  at 
that  time,  however.  In  1818  there  were  392  banks  in  23  states 
and  territories,  located  as  follows:4 

DISTRIBUTION    OF   STATE    BANKS    IN    THE   UNITED    STATES    IN    l8'l8. 

New  Hampshire...  12  Delaware    8    Kentucky  v.  59 

Vermont   5  Maryland    25    Tennessee    3 

Massachusetts   ....  38  Virginia   17    Louisiana    3 

Rhode  Island 35  North  Carolina —  7    Michigan    1 

Connecticut    10  South    Carolina 3    Missouri    2 

New  York 42  Georgia   3  District  of  Colum- 

New  Jersey 14  Ohio    28        bia    15 

^Pennsylvania    59  Indiana    3 

Total    No 392 

The  Portsmouth,  Ohio,  Gazette  of  August  12,  1818,  gives 
a  list  of  23  chartered  banks  in  Ohio,5  and  remarks:  "It  is  sup- 
posed that  all  the  above  banks  have  been  generally  prudently 
managed;  and  all,  (except  the  German  Bank  of  Wooster),6  are 
in  good  credit  in  their  respective  neighborhoods,  and  promptly 
redeem  their  notes  with  specie."  It  adds,  however, — "The  notes 
of  all  the  unchartered  banks  in  this  state  with  the  exception  of 
John  H.  Piatt  &  Company's  Bank,  Cincinnati,  which  are  in  good 
credit,  and  the  Bank  of  Xenia, .which  are  still  current  in  some 
places,  are  considered  as  good  for  nothing." 

Confidence  in  the  local  banks  was  not  destined  to  continue 
much  longer  however.  For  in  the  summer  of  1818  began  the 


"History  of  the  United   States  —  McMaster,  Vol.  IV,  p.  317. 

A  somewhat  similar  condition  arose  in  Ohio  at  a  much  later  date. 
Early  in  the  Civil  War  period  there  sprang  up  over  the  state  the  use  of 
"checks,"  "tickets,"  "notes,"  "orders,"  etc.,  for  fractional  parts  of  a 
dollar  issued  by  various  counties,  cities,  villages,  associations  and  indi- 
viduals, and  purporting  to  be  redeemable  in  current  bank  notes  or  gov- 
ernment notes  when  presented  in  sums  of  $5,  etc.  —  Rept.  of  State  Aud. 
on  condition  of  banks  in  December,  1862. 

4  Hist,  of  U.  S.  — McMaster,  Vol.  IV,  p.  485. 

8  Five  of  those  chartered  the  preceding  winter  omitted. 

'Reported  Nov.  1817  as  having  stopped  specie  payt.  —  O.  Watchman, 
Nov.  20,  1817. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      59 

crisis  in  the  Mississippi  Valley, — a  part  of  the  industrial  and 
commercial  storm  which  swept  the  entire  country.7  At  the 
beginning  of  the  year  1818  the  whole  country  south  and  west 
of  New  England  was  enjoying  apparently  the  most  enterprising 
prosperity.  Before  the  year  ended  it  presented  a  scene  of  general 
bankruptcy,  confusion,  and  dismay.8 

Causes  of  the  Crisis  of  1818-19.  —  The  causes  of  the  crisis 
were  complex.  An  unnatural  expansion  in  trade  had  succeeded 
the  restrictions  caused  by  the  embargo  and  the  war.  The  for- 
eign commerce  of  the  country  had  grown  from  less  than  $20,- 
000,000  in  the  year  ending  September  30,  1814,  to  over  $152,- 
000,000  in  that  ending  September  30,  1815,  and  over  $194,000,- 
ooo  in  that  September  30,  1816.  In  each  of  these  three  years  the 
value  of  imports  was  about  twice  that  of  the  exports.9  This 
made  it  difficult  or  impossible  for  the  manufacturing  industries 
of  the  country  to  get  a  stable  footing  after  the  abnormal  growth 
occasioned  by  the  embargo  and  the  war. 

The  speculation  and  high  prices  promoted  by  the  several 
years  of  commercial  expansion  and  excessive  banking  were  suc- 
ceeded by  a  contraction  of  credits  and  a  fall  in  prices  when  the 
banks  endeavored  to  return  to  a  specie  basis  in  1817.  The  bank 
circulation,  which  in  1815  and  1816  had  reached  $110,000,000, 
was  decreased  until  in  1819  it  was  only  $65,ooo,ooo.10  This  re- 
sulted in  a  ruinous  fall  in  prices.  "In  no  other  epoch  of  the 
century,"  says  Burton,  "is  it  probable  that  the  fall  in  prices  of 
commodities  and  real  estate  was  so  marked  as  in  I8I8-I9.11 

The  expansion  of  credits  and  speculative  enterprises  had 
been  accompanied  by  a  great  increase  of  luxury  and  waste.  A 
large  part  of  the  people  became  possessed  of  the  desire  to  live 
by  speculation  instead  of  by  work.  The  gambling  spirit  dom- 
inated them.  There  were  no  reasonable  foundations  to  many 
of  the  schemes  and  no  limits  to  the  extravagances  of  the  people. 


'History  of  Banking  in  All  Nations,  Vol.  I,  p.  109. 

"The  History  of  Banks  —  Hildreth,  p.  65. 

8  Crises  and  Depressions  —  Theodore  E.  Burton,  pp.  276-7. 

10  Financial   History  of  the   United    States  —  Albert   Bolles,   2: 

11  Crises  and  Depressions,  p.  276. 

See  also  The  History  of  Banks  —  Hildreth,  p.  165. 


60  Ohio  Arch,  and  Hist.  Society  Publications. 

A  fictitious  value  was  given  to  all  kinds  of  property.  Specie 
disappeared  from  circulation  and  all  efforts  to  restore  society  to 
its  natural  condition  were  treated  with  contempt.12 

This  unnatural  state  of  things  could  not  last  long.  Men 
who  contracted  debts  found,  when  called  upon  for  payment  that 
the  means  were  wanting.  Banks  that  had  made  excessive  issues 
found  themselves  unable  at  times  to  redeem  their  paper  on  de- 
mand, and  the  currency  of  course  began  to  depreciate.  The  tide 
began  to  ebb,  and  things  to  settle  to  their  natural  level.  The 
first  indication  of  this  change  was  the  failure  of  the  banks,  at 
first  as  rare  occurrences;  but  soon  these  failures  became  so  nu- 
merous and  common  that  the  paper,  except  of  the  banks  of 
Louisiana,  Mississippi  and  a  few  of  the  interior  \banks,  became 
practically  worthless.13 

The  Crisis  in  the  West  Occasioned  by  the  United  States 
Bank. — The  crisis  in  the  west  began  in  the  summer  of  1818. 
The  immediate  cause  was  the  Bank  of  the  United  States.14  The 
state  of  the  currency  and  the  business  of  the  country  determined 
that  the  course  of  exchange  should  be  almost  constantly  in  favor 
of  the  east  and  north,  and  against  the  west  and  south.  The 
western  states,  having  less  capital,  were  in  the  course  of  trade 
generally  indebted  to  the  Atlantic  seaports.  Whether  on  ac- 
count of  larger  purchases  of  public  lands  than  usual,  the  excited 
spirit  of  enterprise,  or  whatever  cause,  it  appears  that  during 
the  years  immediately  following  the  opening  of  the  United 
States  Bank  the  amount  of  debts  due  by  the  west  either  to  the 
east  or  to  the  government,  was  unusually  large.  The  western 
branches  of  the  bank  as  a  result  discounted  too  largely.15 

Expansion  of  Credits  by  Western  Branches.  —  On  ac- 
count of  the  course  of  exchange  being  in  favor  of  the  east  and 


"Financial  History  of  the  United  States  —  Dewey,  p.  166. 

Crises  and  Depressions  —  Burton,  pp.  275-277. 

Money  and  Banking  —  White,  pp.  365-6. 

"Valley  of  the  Mississippi  —  Flint,  Vol.  I,  p.  179. 

Preliminary  History  of  Ohio  — Chase  (In  Revised  Statutes  of  1833). 

For  Ohio  Notes  see  Appendix,  pp.  259,  264. 

"History  of  Banking  in  All  Nations,  Vol.  I,  p.  109. 

15  Considerations  on  the  Currency  —  Gallatin,  p.  48. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      61 

against  the  west  the  western  branches  could  issue  their  notes 
without  much  danger  of  their  returning  upon  them.  Hence  they 
piled  up  enormous  loans.  For  example,  the  Cincinnati  Branch 
discounted  over  $1,000,000  in  October  1817,  over  $1,836,000  in 
June  1818,  and  $1,867,383  in  November  1818.  The  Lexington 
Branch  discounted  over  $1,600,000  in  June  1818  and  over  $i,~ 
700,000  in  November  1818.  Similar  conditions  existed  at  every 
western  branch.16 

By  these  large  issues  of  branch  notes  and  of  drafts  on  the 
parent  bank  and  the  eastern  branches,  western  debtors  were 
enabled  to  pay  their  eastern  creditors;  but  the  debt  was  merely 
transferred  to  the  United  States  Bank,  where  large  balances  ac- 
cumulated against  the  local  banks.  The  issues  also  increased 
the  inflation  in  the  west. 

Operations  of  United  States  Bank  Increase  Inflation  in 
the  West.  —  "It  may  perhaps  be  just  to  say,"  says  Sumner, 
"that  but  for  the  Bank  of  the  United  States  the  West  would 
never  have  been  drawn  into  the  inflation."17  This  statement 
seems  somewhat  too  strong  in  view  of  the  fact  that  there  had 
been  inflation  in  the  west  for  a  year  and  a  half  before  the 
United  States  Bank  opened.  But  the  large  issues  of  the  western 
branches  certainly  did  increase  the  inflation. 

As  the  notes  issued  by  each  branch  of  the  United  States 
Bank  were  redeemable  at  any  other  branch  or  at  the  parent  bank, 
the  large  issues  of  the  western  branches  resulted  in  draining  the 
capital  from  the  main  office  and  the  eastern  branches  to  the 
western  branches.  Thus  in  the  spring  of  1819,  although  great 
curtailments  had  then  taken  place,  nearly  $6,500,000  of  the  cap- 
ital of  the  bank  was  distributed  among  the  interior  western 
offices,  whereas  the  whole  amount  allotted  to  the  offices  north 
and  east  of  Philadelphia  was  less  than  $i,ooo,ooo.18  Then,  too, 
the  notes  of  the  western  branches  which  remained  in  circula- 
tion in  the  west  helped  to  increase  the  inflation. 

Moreover,  by  extending  the  loans  of  the  western  branches, 
the  United  States  Bank  permitted  the  state  banks  to  over-trade 


18  The  Second  Bank  of  the  United  States  —  Catterall,  p.  34. 
"History  of  Banking  in  All  Nations,  Vol.  I,  p.  109. 
18  Considerations   on  the  Currency  —  Gallatin,  p.  49. 


62  Ohio  Arch,  and  Hist.  Society  Publications. 

and  inflate  the  currency.  For,  up  until  July,  1818,  the  Bank 
did  not  insist  on  the  payment  of  the  balances  due  from  the 
state  banks.  The  latter  always  had  large  balances  against  them 
at  the  western  branches,  and  not  being  called  upon  for  these 
balances,  they  continually  inflated  their  issues  and  expanded  their 
discounts.19 

The  western  branches  issued  their  own  notes  in  preference 
to  those  of  state  banks  and,  whenever  possible,  delivered  drafts 
on  eastern  cities  to  prevent  remitting  their  own  notes.  The 
branch  notes  and  drafts  thus  sent  east  tended  to  produce  a  vacuum 
in  the  circulation.  This  was  quickly  filled,  however,  by  the 
notes  of  local  banks,  which  were  readily  received  by  the  branches 
and  kept  as  a  fund  on  which  to  charge  interest  to  the  state  banks. 
By  accepting  bank  notes  not  apt  to  be  redeemed  and  making 
them  the  circulating  medium  in  the  region  where  issued  the 
United  States  Bank  made  the  mistake  of  increasing  the  very 
notes  least  worthy  of  confidence.20 

Sudden  Restriction  of  Credits  by  United  States  Bank 
precipitates  the  Panic.  —  In  the  summer  of  1818,  however,  the 
United  States  Bank  realized  the  danger  and  in  order  to  secure 
safety  made  a  radical  change,  restricting  its  issues,  calling  on 
the  state  banks  for  the  balances  due,  and  adopting  the  policy  of 
redeeming  none  of  its  notes  except  at  the  branch  where  issued. 
This  sudden  reversal  of  policy  coming  at  a  time  when  every- 
thing was  so  inflated  burst  the  bubble  and  "precipitated  the 
panic,  for  which,  however  it  was  hardly  more  responsible  than 
was  Noah  for  the  flood."21 

The  country  was  quite  unprepared  for  these  measures  and 
they  occasioned  much  suffering  and  embarrassment.  The  keen- 
est distress  fell  upon  the  west.  The  conditions  there  had  never 


19  The  Second  Bank  of  the  United  States  —  Catterall,  p.  35. 

20  Financial   History   of    the   United    States,    1789-1860  —  Bolles,    pp. 
323  and  324. 

21  Second  Bank  of  the  United  States  —  Catterall,  p.  61. 
See  also  —  A  Short  History  of  Banking  —  Gouge,  p.  64. 
Financial  History  of  the  United  States  —  Dewey,  p.  152. 
Considerations  on  the  Currency  —  Gallatin,  p.  49. 
History  of  Banking  in  All  Nations,  Vol.  I,  p.  109. 
Crises  and  Depressions  —  Burton,  p.  276. 


Banking  and  Currency  in  Ohio  Before  the  Civil  I  Tar       63 

justified  the  large  loans  of  the  United  States  Bank,  and  the  in- 
flation and  overtrading  by  the  state  banks  had  aggravated  the 
evil.  Much  of  the  indebtedness  in  the  west  had  been  created  by 
loans  to  farmers,  and  was  secured  only  by  mortgages  on  greatly 
over-valued  real  estate,  which  was  unsalable  during  a  crisis.  In 
the"  towns  the  money  borrowed  had  been  expended  mostly  in 
permanent  improvements  and  could  not  be  repaid  on  demand. 
In  fact  the  borrowers  had  never  expected  to  pay  the  notes  when 
they  first  came  due,  the  usual  custom  being  to  renew  again  and 
again.  Consequently  the  restrictive  orders  compelling  the  pay- 
ment of  debts  just  when  it  was  most  difficult  to  pay  them 
greatly  increased  the  already  keen  hostility  against  the  bank.22 
The  view  of  the  matter  taken  by  almost  everybody  in  1818-19 
was  expressed  by  Gouge  thus:  "The  Bank  was  saved  and  the 
people  were  ruined."23 

United  States  Bank  calls  for  Balances  due  from  Cincinnati 
Banks.  —  The  United  States  Bank  was  very  sudden  in  its 
demands.  On  July  20,  1818,  the  parent  bank  ordered  the  Cin- 
cinnati branch  to  collect  the  balances  due  from  the  local  state 
banks  at  the  rate  of  20%  every  30  days.  As  the  balances  due 
from  the  Cincinnati  banks  amounted  to  about  $720,000,  this  de- 
mand meant  they  were  called  upon  to  pay  about  $144,000  every 
month.24  The  difficulty  was  increased  when,  on  August  28, 
i  Si 8,  the  Bank  issued  its  orders  to  the  branches  to  cease  re- 
ceiving each  others  notes.25  The  Cincinnati  banks  could  not 
pay.  In  fact  in  October  they  owed  more  than  they  had  in  July, 
although  they  had  tried  to  redeem  their  debt,  incidentally  in- 
flicting distress  upon  their  own  debtors  who;  having  neither 
specie  nor  bank  notes,  simply  could  not  pay. 

Suspension  of  Specie  Payment  by  Ohio  Banks.  —  The 
Cincinnati  banks  protested  vigorously  against  the  action  of  the 
United  States  bank.  But  the  latter,  instead  of  yielding  and  offer- 


22  Second  Bank  of  the  United  States  —  Catterall,  pp.  61  and  62. 

23  A  Short  History  of  Banking  —  Gouge,  p.  71. 

24  Nile's  Register,  Vol.  XV,  p.  59.     (Sept.  19,  1818). 
The  Supporter,    (Chillicothe,  O.),  Aug.  26,   1818. 

A  Short  History  of  Banking  —  Gouge,  pp.  64  and  90. 

25  Financial  History  of  the  United   States  —  Dewey,  p.   152. 


64  Ohio  Arch,  and  Hist.  Society  Publications. 

ing  more  favorable  terms,  prohibited  the  receipt  of  the  notes  of 
the  Cincinnati  banks.  This  precipitated  a  disaster.  The  three 
Cincinnati  banks  suspended  specie  payment  on  November  5, 
i8i8.26  Most  of  the  other  Ohio  banks  soon  followed. 

Niles'  Register  of  December  12,  1818  says:  "It  is  stated 
that  $2500,  per  week  are  required  to  pay  the  discounts  on  monies 
loaned  by  the  branch  of  the  bank  of  the  United  States  at  Cin- 
cinnati  the  branch  has  scarcely  any  of  its  notes  in  cir- 
culation and  Ohio  has  been  drained  of  specie.  It  is  a  serious 
enquiry  how  these  discounts  are  to  be  paid."  The  same  paper 
states  that  many  of  what  were  considered  the  best  banks  in 
Ohio  had  stopped  specie  payment,  and  that  it  was  feared  that 
all  the  rest  must  follow.27  And  in  its  issue  of  January  9,  1819 
this  paper  announced  that  only  two  or  three  banks  in  Ohio  were 
still  paying  specie,  adding  also  that  of  the  notes  of  these  there 
were  very  few  in  circulation.28  The  notes  of  nearly  all  the 
Ohio  banks,  already  below  par  before  the  suspension,  continued 
to  depreciate  more  and  more,  and  the  paper  of  several  of  them 
became  absolutely  worthless.29 

Notes  of  Many  Ohio  Banks  refused  at  State  Treasury  in 
Payment  of  Taxes.  —  In  September  1818  it  was  stated  that 
the  notes  of  16  of  the  chartered  banks  of  Ohio  would  not  be 
received  in  payment  of  the  state  taxes.30  In  Governor  Worthing- 
ton's  Message  to  the  Ohio  legislature  on  December  7,  1818,  he 
speaks  of  the  disordered  state  of  the  paper  currency,  the  great 
difficulty  the  people  of  the  state  had  in  paying  and  the  officers 
of  the  state  in  collecting  the  taxes,  and  urges  that  the  legislature 
designate  by  law  what  should  be  received  by  the  collectors  in 
payment  of  state  and  county  taxes.  He  even  suggests  for  the 
consideration  of  the  legislature  the  question  of  the  establish- 


26  Liberty  Hall  and  Cincinnati  Gazette,  Nov.  11,  1818. 
Second  Bank  of  the  United  States  —  Catterall,  pp.  62  and  63. 

27  Niles'  Register,  Vol.  XV,  p.  283. 
29  Ibid.,  p.  361. 

29  Preliminary  Sketch  of  Ohio  in  Chase's  Revised  Statutes,  1833. 
Elliot's  Funding  System,  p.  1106. 

Ohio  Watchman,    (Dayton),  Oct.  29,  1818. 
See  Appendix  p.  259. 

30  Niles'  Register,  Sept.  19,  1818,  p.  59. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War,      65 

ment  of  a  state  bank  to  be  composed  of  the  banks  already  in- 
corporated that  might  be  willing  to  surrender  their  existing 
charters  and  become  branches  of  a  state  bank,  whose  paper 
should  be  received  in  payment  of  taxes.  He  added,  however, 
that  time  could  determine  whether  such  a  bank  would  lessen  the 
difficulties  then  felt.31  But  nothing  came  of  this  at  that  time. 

State  Bank  Notes  refused  at  Cincinnati  in  payment  of 
Public  Land  Sales:  Chartered  Banks  ask  Repeal  of  Bonus 
Law.  —  In  November  1818  the  banks  were  in  such  a  condition 
that  the  land  agent  at  Cincinnati  was  ordered  to  take  nothing 
but  United  States  notes  and  specie  in  payment  of  land  sales. 
This  caused  consternation  among  the  banks.  The  notes  of  the 
United  States  Bank  had  never  circulated  in  Cincinnati  to  any 
great  extent,  and  at  that  time  specie  was  equally  scarce.  Brokers 
were  selling  it  at  20%  premium  and  their  stock  threatened  soon 
to  be  exhausted.  The  result  of  the  edict  was,  therefore,  that  the 
sale  of  public  lands  was  stopped  in  that  locality.32 

At  a  meeting  of  bank  delegates  from  middle  and  western 
Ohio  it  was  agreed  to  petition  the  legislature  to  take  back  their 
charters  and  repeal  the  bonus  law  of  i8i6.33 

The  committee  of  the  legislature  to  whom  this  petition  was 
referred,  however,  took  the  ground  that  capital'  invested  in 
banking  was  a  proper  subject  of  taxation,  and  reported  that  it 
was  not  expedient  at  that  time  to  exempt  the  state  banks  from 
the  payment  of  the  bonus.34  Consequently,  although  Governor 
Brown  in  his  message  to  the  legislature  December  16,  1818,  sug- 
gested substituting  a  tax  on  the  real  estate  of  the  banks,  and  a 
rate  on  their  dividends  in  place  of  the  bonus,35  the  so-called 
bonus  law  remained  on  the  statute  books  until  1825. 

Unauthorized  Banking  in  Ohio.  —  In  the,  petition  one  of 
the  reasons  given  by  the  banks  for  asking  the  repeal  of  the  bonus 
law  was  that  the  state  had  not  suppressed  illegal  banking  accord- 


31  Message  printed  in  Niles'  Register,  Vol.  XV,  supplement,  p.  87. 

82  Liberty  Hall  and  Cincinnati  Gazette,  Nov.  17,  1818. 

83  History  of  the  United  States  —  McMaster,  Vol.  IV,  p.  488. 

34  Ohio  Senate  Journal,  1818,  p.  256. 

35  Niles'  Register,  Vol.  XV,  Supplement,  p.  91. 

5 


66  Ohio  Arch,  and  Hist.  Society  Publications. 

ing  to  the  promise  alleged  to  have  been  implied  in  the  provisions 
of  the  law  of  i8i6.36  In  fact  the  unauthorized  banks  had  con- 
tinued to  flourish  and  their  numbers  had  constantly  increased. 
Some  of  these  were  in  very  good  repute.  Such  were,  —  the 
Bank  of  Xenia,  whose  notes  in  June  1818  were  said  to  be  2% 
higher  at  the  banks  of  Cincinnati  than  those  of  any  other  of 
the  banks  of  the  state  except  the  Miami  Exporting  Company;37 
and  the  bank  of  John  H.  Piatt  and  Company  of  Cincinnati,  whose 
notes  were  only  4^%  discount  in  October,  i8i8.38  Others,  how- 
ever, like  the  Owl  Creek  Bank  at  Mt.  Vernon,39  or  the  Granville 
Bank,  whose  officials  John  Kilbourn,  on  November  12,  1818,  said 
he  esteemed  in  their  private  capacities,  but  as  bank  directors  he 
publicly  proclaimed  to  be  "a  pack  of  knaves  and  swindlers/'40 
issued  paper  without  restriction,  never  expecting  to  redeem  it  at 
all. 

Some  of  the  chartered  banks  had  been  established  with  in- 
sufficient capital,  with  little  or  no  specie,  and  in  places  where 
there  was  no  active  trade ;  but  the  legislature,  as  Governor  Brown 
remarked  in  his  message  of  December  16,  1818,  had  become 
more  cautious  about  granting  those  incorporations.41  Conse- 
quently their  number  did  not  increase  in  Ohio  during  this  period. 
But  the  laws  against  unauthorized  banking,  though  perhaps  of 
some  benefit,  were  far  from  effective,  and  did  not  prevent  impo- 
sitions on  a  confiding  public.  The  number  of  unauthorized 
banks  and  the  amount  of  their  paper  in  circulation  increased 
continually.  "The  extravagant  number  of  banks  in  this  as  well 
as  other  states  in  addition  to  the  evil  of  banishing  an  universal 


36  Ohio  Senate  Journal,  1818,  p.  256. 

"Ohio  Watchman,  (Dayton),  June  25,  1818. 

During  the  session  of  1818-19  the  Bank  of  Xenia  applied  to  the 
legislature  for  a  charter,  offering  to  make  the  stockholders  liable  in  their 
individual  capacity,  to  forfeit  their  charter  by  ceasing  to  pay  specie,  and 
to  publish  annually  a  list  of  officers.  The  application  was  made  too  late 
in  the  session,  however,  to  leave  time  for  the  granting.  —  Ohio  Watch- 
man, Feb.  25,  1819. 

38  Ibid.,  Oct.  29,  1818. 

39  See  Niles'  Register,  Vol.  LI  I,  p.  85. 

40  Ohio  Watchman,  Dec.  3,  1818. 

41  Niles'  Register,  Vol.  XV.     Supplement,  p.  91. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War       67 

medium  from  common  circulation  by  substituting  an  excessive 
quantity  of  bank  notes  has  rendered  it  impossible,"  says  Gov- 
ernor Brown  in  the  message  referred  to  above  "for  citizens  to 
distinguish  between  genuine  and  counterfeit."42 

Counterfeit  Notes,  Small  Notes,  Post  Notes,  Buying  up 
Notes  at  Discount,  and  Tax  on  Unauthorized  Banks.  — 
Counterfeit  notes,  which  had  been  numerous  in  the  state  dur- 
ing the  inflation  period,43  became  still  more  abundant  in  1818 
and  the  years  following.44  Many  of  these  came  from  manufac- 
tories in  Canada.  They  were  too  numerous  to  admit  of  de- 
scription.45 

Notes  of  very  small  denominations  became  quite  common. 
Some  of  the  banks  issued  post  notes.  Others  indulged  in  the 
practice  of  buying  up  their  own  paper  at  a  discount.  The  legis- 
lature was  continually  passing  laws  on  these  subjects,  usually 
in  vain  however.  On  February  5,  1819,  an  act  was  passed 
making  it  unlawful  to  issue  notes  payable  at  a  future  day,  and 
forbidding  the  issue  or  receipt  of  a  note  or  bill  less  than  $i.46 

An  act  to  prohibit  the  practice  of  buying  and  receiving  bank 
notes  at  a  discount  was  passed  February  8,  i8i9.47  It  provided 
that  all  bank  notes  should  pass  at  their  face  value;  fixed  a  pen- 
alty of  not  over  $500  for  receiving  or  paying  away  notes  at  a 
discount;  and  provided  that  persons  paying  away  notes  at  a  dis- 
count might,  on  suit,  recover  the  difference.  Its  lack  of  success, 
however,  is  indicated  by  its  repeal  on  January  24,  i82O.48  That 
this  practice  was  quite  common  at  the  time  is  made  plain  by  an 
article  from  the  Cincinnati  Enquirer  quoted  in  Niles'  Register 
of  July  29,  i820.49  This  article  says  that  there  was  great  excite- 
ment at  Cincinnati  on  account  of  the  belief  generally  entertained 


42  Miles'  Register,  Vol.  XV.     Supplement,  p.  92. 

43  Chillicothe,  Ohio,   Supporter,  Aug.  16,  1816. 

44  Liberty  Hall  and  Cincinnati  Gazette,  Aug.  4,  1818. 
Ibid.,  Sept.  1,  1821. 

Niles'  Register,  Aug.  8,  1819,  p.  396. 

45  Ibid.,  Vol.  XIX,  p.  328,  Jan.  13,  1821. 

46  Revised   Statutes  of  Ohio,  1833,    (Chase),  p.   1067. 

47  Laws  of  Ohio,  Vol.  XVII,   (1819),  p.  152. 
43  Revised  Statutes,   (Chase),  p.  1070. 

49  Page  399. 


68  Ohio  Arch,  and  Hist.  Society  Publications. 

that  those  concerned  in  the  Miami  Bank  were  secretly  engaged 
in  purchasing  up  its  notes  at  a  very  large  discount  though,  as  it 
was  also  thought,  the  bank  was  able  to  meet  its  engagements, 
under  a  careful  management.  "If  such  things  have  not  happened 
at  Cincinnati,"  proceeds  the  writer,  "they  have  happened  at  other 
places  and  there  is  no  sort  of  novelty  in  them."  The  bills  of  the 
bank  alluded  to  were  worth  about  25  cents  on  the  dollar  in 
Baltimore. 

The  same  article  states  that  the  inhabitants  of  Springfield, 
Hamilton  County,  Ohio,  had  just  held  a  meeting  at  which  they 
charged  the  non-specie  paying  banks  with  a  design  to  depreciate 
their  own  paper  for  the  purpose  of  buying  it  up  at  very  reduced 
rates.50 

At  the  meeting  referred  to  above,  resolutions  were  adopted 
"to  desist  from  the  use  of  any  paper  of  banks  that  refuse  to  dis- 
charge promptly  the  obligations  specified  on  the  face  of  the  note/' 
and  inviting  'the  people  of  the  Miami  country  to  adopt  similar 
resolutions,  for  too  much  forbearance  had  been  indulged  in 
towards  the  delinquent  banks. 

On  February  18,  1820  an  act  was  passed  by  the  legislature 
to  enforce  payment  by  banks.  It  also  prohibited  the  issuing  of 
bills  payable  at  a  future  date.51  On  February  22,  1821,  Febru- 
ary 22,  1822,  and  January  28,  1824  acts  were  passed  to  facilitate 
the  collection  of  debts  against  banks.  The  last  reinforced  the 
prohibition  of  bills  payable  at  a  future  date.52  The  very  number 
of  these  laws  evidences  their  futility. 

The  act  of  February  8,  1819,  which  taxed  the  branches  of 
the  United  States  Bank  in  Ohio,53  was  entitled,  —  "An  Act  to 
levy  and  collect  a  tax  from  all  banks  and  individuals,  and  com- 
panies, and  associations  of  individuals,  that  may  transact  busi- 
ness in  this  state  without  being  authorized  to  do  so  by  the  laws 
thereof."54  Besides  laying  a  tax  on  the  United  States  Bank 


60  Niles'  Register,  July  29,  1820,  p.  399. 

See  also  Liberty  Hall  and  Cincinnati  Gazette,  July  1,  1820. 

"History  of  Banking  — Knox,  p.  671. 

83  Ibid. 

63  See  page  89. 

"Laws  of  Ohio,  Vol.  XVII,   (1819),  p.  190. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      69 

branches  in  the  state,  this  act  goes  on  to  say,  —  "Whereas  divers 
companies  and  associations  of  individuals  within  this  state,  un- 
authorized by  law,  continue  in  like  manner,  to  do  business  as 
bankers  and  banks,  by  loaning  money  and  issuing  bills,  and  by 
trading  in  notes  and  bills ;  and  whereas  it  is  just  and  necessary 
that  such  unlawful  banking,  while  continued,  should  be  subject 
to  the  payment  of  a  tax  for  the  support  of  the  government."  It 
then  provides  for  a  tax  of  $10,000  on  such  banks.55  Having 
failed  to  abolish  unauthorized  banks  the  legislature  evidently 
thought  the  next  best  thing  would  be  to  get  some  revenue  from 
them. 

The  foregoing  is  interesting,  too,  on  account  of  the  evidence 
it  affords  that  the  hostility  against  the  United  States  Bank  was 
not  at  first  due  wholly  to  its  curtailments  nor  to  its  discipline  of 
state  banks,  but  largely  to  jealousy  of  it  as  a  foreign  institution 
present  without  the  authority  or  will  of  the  state,  and  paying  no 
taxes.56 

Specie  drained  from  Ohio  by  the  United  States  Bank.  — - 
The  hostility  against  the  United  States  Bank  was  increased  by 
the  draining  of  specie  from  the  state  through  its  financial  opera- 
tions. Cincinnati  papers  were  complaining  of  the  scarcity  of 
specie  early  in  November,  i8i8.57  A  week  later  it  was  stated 
that  two  wagons  loaded  with  specie  from  the  branch  of  the 
United  States  Bank  at  Chillicothe  had  started  for  Philadelphia, 
and  it  was  estimated  that  this  meant  from  $120,000  to  $140,000 
in  specie  drawn  probably  from  the  state  banks  of  Ohio.58  Niles' 
Register  of  June  26,  1819  says,  "It  is  estimated  that  $800,000  in 
specie  have  been  drawn  from  Ohio  within  the  last  twelve  months 
for  the  Bank  of  the  United  States."59  Gouge,  in  commenting  on 
this,  remarks,  "If  this  be  true  the  wonder  is  not  that  only  six  or 


55 Revised  Statutes  of  Ohio,  1833,  (Chase),  p.  1072.    Laws  of  Ohio, 
17:190. 

66  See  History  of  Banking  in  All  Nations,  Vol.  I,  p.  109. 
"Liberty  Hall  and  Cincinnati  Gazette,  Nov.  17,  1818. 

68  Ibid.,  Nov.  24,  1818.    See  also  Niles'  Register,  June  5,  1819,  p.  256. 

69  Page  298. 


70  Ohio  Arch,  and  Hist.  Society  Publications. 

seven  banks  in  the  state  paid  specie  in  August,  1819,  but  that 
they  were  not  all  bankrupt."60 

Fall  of  Prices  in  Ohio  and  the  West.  —  The  effect  which 
the  sudden  withdrawal  of  specie  by  the  United  States  Bank  and 
the  discrediting  of  bank  paper  had  on  prices  in  the  western  coun- 
try was  very  distressing.  Prices  went  very  low  in  Ohio  and  the 
west  generally.61  "In  the  early  part  of  1819  the  price  of  west- 
ern produce  fell  so  low,"  says  Sumner,  "as  hardly  to  pay  the 
transportation  to  ports  whence  they  were  shipped  to  foreign 
markets."62  While  land  suddenly  became  practically  unsalable.63 

In  November,  1816,  wheat  was  selling  at  Chillicothe  at  $1.50 
and  corn  at  5oc  per  bushel,  and  people  were  advised  to  hold  on 
to  their  produce  as  it  was  likely  to  go  higher  yet.64  In  October, 
1818,  in  the  same  town,  wheat  was  quoted  at  75c  a  bushel.65  In 
Dayton,  Ohio,  January  i,  1817  wheat  was  $i.  per  bushel.  In 
October,  1819,  it  was  selling  at  62-|c  per  bushel;  while  in  1821 
and  1822  the  price  went  as  low  as  2oc  a  bushel.  In  March,  1822, 
the  Dayton  prices  were:  Flour  $2.50  per  barrel,  whiskey  i2-|c 
per  gallon,  wheat  2Oc,  rye  25c,  and  corn  i2c  per  bushel,  fresh 
beef  i  to  3c  per  pound,  butter  5  to  8c  per  pound,  eggs  3  to  50 
per  dozen,  and  chickens  50  to  75c  per  dozen.66 

A  letter  from  a  Cincinnati  man,  July  26,  1820,  quoted  in  a 
Steubenville  paper  states  that  at  a  marshal's  sale  a  handsome 
gig  and  very  valuable  horse  had  sold  for  $4,  an  elegant  sideboard 
for  $3,  a  fine  Brussel's  carpet  and  two  Scotch  carpets  for  $3, 
etc.  The  writer  adds  that  a  man  with  a  little  money  could  make 
a  fortune  by  attending  marshal's  and  sheriff's  sales.67  In  the  fall 
and  winter  of  1822  the  exports  from  Cincinnati  were  valued  at 
very  low  rates,  e.  g.  —  pork  2c  a  pound,  flour  $3  a  barrel,  and 


60  Journal  of  Banking,  Mar.  30,  1842,  p.  320. 
81 A  Short  History  of  Banking  —  Gouge,  p.  91. 
62  History  of  Banking  in  All  Nations,  Vol.  I,  p.  111. 
83  Valley  of  the  Mississippi  —  Flint,  Vol.  I,  p.  180. 
"The  Scioto  Gazette  and  Fredonian  Chronicle,  Nov.  28,  1816. 
86 The  Supporter   (Chillicothe,  O.),  Oct.  21,  1818. 
68  History  of  Montgomery  County,  Ohio,  p.  343.      (Pub.  by  W.  H. 
Beers  &  Co.     Chicago.     1882.) 

Dayton  Watchman,  Apr.  9  and  June  18,  1822. 

"Western  Herald  and  Steubenville  Gazette,  Aug.  19,  1820. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War       71 

whiskey  140  a  gallon.68  An  article  in  a  Portsmouth,  Ohio,  paper 
in  August,  1821,  quotes  flour  at  $i  per  barrel,  whiskey  at  150  a 
gallon,  sheep  and  calves  at  $i  per  head.  The  writer  adds  that 
a  bushel  and  a  half  of  wheat  will  buy  a  pound  of  coffee,  a  barrel 
of  flour  will  buy  a  pound  of  tea,  \2\  barrels  will  buy  a  yard  of 
superfine  broadcloth,  etc.,  if  the  farmer  will  sell  his  flour,  bacon, 
and  whiskey  to  somebody  else  and  get  the  cash,  but  the  mer- 
chant will  not  take  produce  in  payment.  "This,"  continues  the 
writer,  "is  the  condition  of  the  western  country.  This  is  the 
prospect  of  the  farmers."69 

Debt  and  Distress  in  the  Mississippi  Valley.  —  While  the 
staples  of  the  western  country  were  at  these  low  prices  the  people 
were  deeply  in  debt  to  the  United  States  Government,  to  eastern 
merchants,  to  the  local  banks,  and  to  one  another.  The  sum  due 
to  the  government  on  account  of  land  purchases,  exceeded  $22,- 
000,000  in  the  latter  part  of  1820.  The  amount  due  to  the  Cin- 
cinnati branch  of  the  United  States  Bank  was  more  than  $2,000,- 
ooo.  While  the  indebtedness  of  the  western  people  to  one  an- 
other, to  the  local  banks,  and  to  the  eastern  merchants  would  be 
hard  to  calculate.70 

Immense  quantities  of  goods  brought  into  the  country  by  the 
merchants  had  been  sold  on  credit,  and  the  debtors  had  nothing 
with  which  to  pay.  All  the  specie  of  the  country  made  its  way 
east  to  pay  for  the  goods  imported.  Immigration  had  stopped, 
and  money  no  longer  came  into  the  country  from  that  source. 
The  notes  of  the  banks  had  all  depreciated  and  many  of  them 
were  practically  worthless.  An  immense  amount  of  bank  paper 
perished,  not  in  the  hands  of  the  speculators  and  those  who 
had  been  active  in  its  issue,  for  they  had  foreseen  the  ruin  and 
had  passed  the  spurious  paper  on  before  the  panic  came,  but  in 
the  hands  of  farmers  and  mechanics  who  had  given  full  value 
for  the  money.  It  would  no  longer  be  received  in  payment  of 
debts.  Credit  was  at  an  end,  and  universal  distress  prevailed.71 


88  Liberty  Hall  and  Cincinnati  Gazette,  Jan.  21,  1823. 
69Scioto  Telegraph  and  Lawrence  Gazette    (Portsmouth,   O.),  Aug. 
25,  1821. 

70 Journal  of  Banking,    (Gouge),  March  30,  1842,  p.  320. 
"Valley  of  the  Mississippi  —  Flint,  Vol.  I,  p.  180. 


72  Ohio  Arch,  and  Hist.  Society  Publications. 

To  relieve  the  public  distress  the  legislature  of  Ohio  passed  a 
law  to  prevent  property  from  being  sold,  unless  it  would  bring 
a  certain  amount  to  be  fixed  by  appraisers.  But  the  law  failed 
to  accomplish  the  desired  result.  Kentucky  adopted  the  relief 
system  to  its  fullest  extent.  Indeed,  throughout  the  Mississippi 
Valley  there  was  liquidation,  and  relief  measures  were  the  order 
of  the  day.72 

Report  of  the  Select  Bank  Committee  of  the  Ohio  Legis- 
lature. —  In  Ohio  the  suspension  of  specie  payments  by  the 
state  banks,  the  depreciation  of  their  paper,  and  the  hard  times 
followed  so  closely  the  demand  upon  the  Cincinnati  banks  for  the 
balances  due  the  United  States  Branch  Bank  that  in  December, 
1818,  the  lower  house  of  the  Ohio  Legislature  appointed  a  select 
committee  to  investigate  and  report  to  the  legislature  the  con- 
dition of  the  state  banks  and  the  causes  of  the  existing  con- 
fusion in  the  currency. 

By  February,  1819,  this  committee  had  made  two  reports  to 
the  legislature,  in  which  they  set  forth  the  condition  of  nearly 
all  the  chartered  banks  in  the  state,73  and  declared  that  their  in- 
vestigation led  "inevitably  to  the  conclusion,  that  the  establish- 
ment and  management  of  the  branches  of  the  United  States 
bank  within  this  state,  have  very  largely  conduced  to  the  pres- 
ent embarrassment  of  the  circulating  medium,  and  have  had  a 
direct  effect  in  producing  the  recent  suspension  of  specie  pay- 
ments by  the  state  banks." 

Recommendations  of  the  Committee.  —  In  view  of  this 
the  committee  recommended  the  propriety  of  providing  by  law 
that  if  the  branches  established  within  the  state  should  remain 
there  and  transact  business  beyond  a  certain  day,  a  tax  should  be 
assessed  and  collected  of  $50,000  annually  upon  each  branch. 
The  committee  also  recommended  that  provision  be  made  by 
law  for  simplifying  legal  proceedings  in  all  cases  where  banks 
were  a  party,  and  for  securing  the  holders  of  bank  notes  against 


72  Journal  of  Banking,   (Gouge),  Apr.  13,  1842,  p.  329. 

History  of  Banking  in  All  Nations,  Vol.  I,  p.  119. 

"Ohio  House  Jour.  1820,  p.  415. 

Ohio  Watchman,  Feb.  11,  1819. 

Liberty  Hall  and  Cincinnati  Gazette,  Feb.  2  and  Feb.  16,  1819. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      73 

impositions  by  prohibiting  all  brokerage  on  bank  paper,  especially 
on  the  part  of  debtors  to  and  stockholders  in  banks.  The  com- 
mittee further  suggested  the  propriety  of  providing  by  law  for 
the  appointment  of  an  attorney  general  whose  duty  it  should  be 
to  cause  the  law  against  unauthorized  banking  to  be  put  in  force 
against  all  that  might  have  infracted  its  provisions,  and  to  in- 
quire into  the  condition  of  those  banks  which  had  refused  to 
report. 

/Condition  of  Chartered  Banks  in  Ohio  in  January  1819.  — 
The  last  suggestion  above  arose  from-  the  fact  that  one-fifth  of 
the  twenty-five  chartered  banks  existing  in  the  state  at  the  end 
of  1818  refused  or  neglected  to  report  to  the  committee.  Of  the 
twenty  banks  which  did  report  the  statistics  were  not  complete. 
Many  of  the  reports  made  did  not  state  exactly  the  whole  ac- 
counts of  the  banks.  Some  omitted  their  real  estate;  some  omit- 
ted their  accounts  with  other  banks,  stating  in  general  terms  that 
their  accounts  were  in  their  favor;  while  others  omitted  to  state 
the  shares  owned  by  the  state,  or  the  amount  of  surplus  funds 
and  undrawn  dividends  remaining  in  the  bank. 

From  these  various  omissions  it  was  impossible  to  make  the 
whole  accounts  of  the  banks  balance,  there  being  a  difference 
of  about  $100,000  in  the  total  assets  and  total  liabilities.  This 
difference  the  committee  thought  to  be  against  the  banks.  To 
supply  the  defects  the  committee  made  use  of  the  state  auditor's 
reports  and  such  other  information  as  was  available  regarding 
the  chartered  banks,  with  the  result  that  they  furnished  to  the 
legislature  considerable  data,  which,  the  committee  remarks, 
"cannot  be  materially  erroneous." 

According  to  these  statistics,  the  paid  in  capital  stock  of 
the  twenty  banks  reporting  amounted  to  about  $1,750,000,  while 
that  of  the  five  banks  which  did  not  report  amounted  to  about 
$600,000,  making  in  all  about  $2,350,000  capital  for  the  twenty- 
five  chartered  banks  in  Ohio  at  the  beginning  of  the  year  1819. 

The  note  circulation  of  the  reporting  banks  amounted  to 
about  $1,166,000  and  that  of  the  other  five  banks  the  committee 
judged  to  be  about  $170,000,  making  the  entire  issue  about  $i,- 
336,000.  But  the  twenty  banks  reporting  held  among  their 
assets  over  $123,000  of  the  notes  of  Ohio  banks.  If  this  amount 


74  Ohio  Arch,  and  Hist.  Society  Publications. 

be  deducted  from  the  above  total,  there  remains  $1,213,000  as 
approximately  the  circulation  of  Ohio  bank  notes  at  that  time. 
Against  this  the  reporting  banks  held  specie  to  the  amount  of 
nearly  $400,000,  and  the  other  chartered  banks,  according  to  the 
committee's  estimates,  held  about  $60,000.  Thus  the  twenty-five 
banks  held  about  $460,000  in  specie  against  an  outstanding  cir- 
culation of  $1,213,000,  or  more  than  one  dollar  in  specie  for  every 
three  dollars  in  circulation.  This  the  committee  considered  as 
good  a  condition  as  that  of  the  United  States  Bank  itself. 

Of  the  debts  due  to  the  United  States  Bank  the  reporting 
banks  owed  about  $694,000,  practically  all  of  which  was  owed 
to  the  Cincinnati  and  Chillicothe  branches,  except  about  $100,000 
which  was  owed  by  the  Bank  of  Steubenville  probably  to1  the 
Pittsburg  branch.  As  the  whole  amount  due  from  the  Ohio 
banks  to  the  Cincinnati  and  Chillicothe  branches  on  October  3, 
1818,  amounted  to  $974,000,  the  committee  figured  that  the  dif- 
ference between  $974,000  and  the  $694,000  due  from  the  twenty 
banks  reporting,  or  about  $280,000,  represented  the  amount  due 
the  United  States  Bank  from  the  five  chartered  banks  in  Ohio 
which  did  not  report.  Most  of  this  $280,000  the  committee 
judged,  was  doubtless  due  from  the  Miami  Exporting  Company. 

The  deposits  of  the  banks  reporting  amounted  to  $268,000, 
the  United  States  Bank  notes  on  hand  amounted  to  $34,000, 
notes  of  other  banks  outside  the  state  $101,000,  real  estate  $87,- 
ooo,  while  their  loans  and  discounts  amounted  to  $2,944,000,  or 
a  little  more  than  the  sum  of  their  capital  stock  and  circulation, 
but  somewhat  less  than  the  sum  of  the  capital  stock,  circulation, 
and  deposits.  The  total  resources  of  the  reporting  banks 
amounted  to  $3,983,897,  and  their  total  liabilities  amounted  to  $3,- 
9^5,530.  Further  details  as  to  the  condition  of  the  banks  are 
shown  in  the  following  statement  of  the  situation  of  the  Ohio 
Banks  which  reported  to  the  Select  Committee  of  the  Legislature 
in  conformity  to  a  resolution  passed  by  the  Ohio  House  of  Rep- 
resentatives in  December,  1818: 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      75 


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76 


Ohio  Arch,  and  Hist.  Society  Publications. 


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Banking  and  Currency  in  Ohio  Before  the  Civil  War.      77 


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78 


Ohio  Arch,  and  Hist.  Society  Publications. 


The  Ratio  of  Circulation  to  Capital,  and  the  Proportion  of 
Capital,  Circulation,  and  Deposits  to  Specie.  —  A  computation 
based  on  the  foregoing  figures  for  the  twenty  banks  which  re- 
ported shows  an  average  ratio  of  6/c  of  circulation  to  each 
dollar  of  capital  stock  paid  in,  $4.38  of  capital  stock  paid  in  to 
each  dollar  of  specie  on  hand,  and  $2.92  of  circulation  to  each 
dollar  of  specie;  while  the  proportion  of  circulation  and  deposits 
combined  is  $3.59  for  each  dollar  of  specie  on  hand.  The  ratios 
for  the  individual  banks  are  shown  in  the  following  table : 


Name  of  Bank. 

Proportion  of 

o 

a 

o 

rt   ?3 

3*5 

o  nJ 
u,   u 

G 

_o 
^ 

o 

0 

1/5 
~     «J 

aJ  'o 

Is 

1=  « 

«  £ 
O 

c  •*•* 
o  </> 

!'! 

3  p.  . 

o  a;  <u 

.b-P'Q 

U 

_o 

c 
o 

as   <u 
fl'i 

2% 
b 

1. 
2. 

3. 

4. 
5. 

6. 

7. 
8. 
9. 
10. 
11. 
12. 
13. 
14. 
15. 
16. 
17. 
18. 
19. 

20. 

Bank  of  Cincinnati  

1.07 
56 

9.97 

5.95 
2.07 
4.53 

16.96 

7.48 
2.57 
17.15 
2.26 
7.80 
1.63 
1.70 
1.84 
2.29 
15.08 
3.56 
1.45 
2.44 

5.13 
10.47 

12.80 

3.31 
2.99 
1.11 

3.71 

4.30 
5.11 
11.96 
2.10 
3.05 
2.63 
3.21 
1.67 
2.38 
5.83 
3.88 
2.59 
3.69 

5.51 
10.32 

10.63 

3.35 

2.57 
.99 

2.67 

3.80 
4.83 
10.37 
1.83 
2.87 
2.15 
2.66 
1.30 
1.06 
3.96 
3.30 
1.52 
2.57 

3.80 
6.35 

Farmers'    and    Mechanics'    Bank    of 
Cincinnati 

Franklin  Bank  of  Columbus  
Bank  of  Chillicothe 

1.24 
.  22 

.16 

.51 
1.88 
.60 
.81 
.37 
1.32 
1.57 
.71 
.47 
.26 
.93 
1.05 
1.05 

.74 
.61 

Farmers'    and    Mechanics'    Manufac- 
turing Bank  of  Chillicothe  
Zanesville  Canal  and   Manufacturing- 
Company       .  .             ... 

Urban  a  Banking  Company     

Farmers'  Bank  of  Canton   

Belmont  Bank  of  St    Clairsville  

Lebanon  Miami  Banking  Company.  .  . 
Bank  of  Mt   Pleasant 

Dayton  Manufacturing  Company  
Lancaster    Ohio    Bank 

Commercial  Bank  of  Scioto  
Bank  of  Steubenville                        .... 

Bank  of   Muskingum 

Bank  of  Hamilton                  ... 

Western  Reserve  Bank  

Farmers'    and    Mechanics'    Bank    of 
Steubenville    

Columbiana  Bank  of  New  Lisbon.... 
Average  for  20  banks  reporting.  . 

.67 

4.38 

3.59 

2.92 

Banking  and  Currency  in  Ohio  Before  the  Civil  War.      79 

The  Distribution  of  Ohio  Banks  by  Counties,  and  the 
Proportion  of  Capital  to  Population,  January  1819.  —  In 

January  1819  the  twenty-five  chartered  banks  of  Ohio  were  located 
in  nineteen  of  the  fifty-nine  counties  of  the  state.  Three  of  the 
banks  were  located  in  Hamilton  County  the  most  populous 
county  of  the  state,  the  county  which  contains  Cincinnati;  three 
more  banks  were  found  in  Jefferson  County,  where  Steubenville 
is  located ;  two  in  Ross  County,  where  Chillicothe  is  the  principal 
town;  and  two  more  in  Muskingum  County,  where  Zanesville  is 
located.  The  remaining  fifteen  banks  were  scattered  through- 
out as  many  counties,  one  to  a  county.  While  less  than  a  third 
of  the  counties  of  the  state  possessed  a  chartered  bank,  yet 
these  nineteen  counties  contained  a  little  over  half  the  population 
of  the  state. 

The  $2,351,127  of  capital  stock  also  was  fairly  well  dis- 
tributed in  proportion  to  the  581,295  inhabitants  of  the  state,  the 
nineteen  counties  containing  banks  having  $7.977  of  banking 
capital  per  inhabitant,  and  the  entire  state  $4.045  per  inhabitant. 
The  counties  having  the  largest  ratio  of  capital  to  population 
were,  —  Hamilton  with  $23.624  per  inhabitant,  Ross  with  $21.- 
699,  Jefferson  with  $12.291,  and  Muskingum  with  $9.921. 

Further  details  are  shown  in  the  following  table:' 


80 


Ohio  Arch,  and  Hist.  Society  Publications. 


DISTRIBUTION    OF    BANKS    AND    CAPITAL    IN    OHIO,    JANUARY    1819. 


Name  of  Bank.* 

County. 

c 

c 
.2 

Jjd 

"5 

Q, 

o 

fc 

g 

c 

1 

c 
6 

Capital    Stock. 

c 

"rt 

S 

h 

Bank    of   We^t   Union 

Adams     

10,406 
20,329 
21,746 
8,479 

22,033 

6,328 
16,633 
10,172 

31,764 
18,531 

15,999 
17,824 

20,619 

5,750 
12,406 
15,542 
17,837 
10,425 
11,933 

1 

1 

1 

1 

1 
1 
1 

3' 
3^ 

j 

36  ,'740 
22,707 
49,685 

56,484 

78  43,  797 
53,745 
51,740 
216,430 

154,776 
78  379,178 
32,175 
140,641 

54,950 
61,340 

79,125 
97,800 
347,840 

99,575 
9,115 
33,710 
66,333 
86,491 
80  71,  750 
81  25,000 

$7.688 
1.807 
1.044 
5.861 

2.564 

6.921 
3.231 

5.087 

23.624 
12.291 

3.834 
!9.921 
21.699 

1.585 
2.717 
4.268 
4.849 
6.882 
2.095 

Belmont  B.  of  St.  Clairsville 

Butler    

Urbana    Banking    Company. 
"—  Golumbiana    Bank    of    New 

Columbiana     
Cuyahoga     

Commercial    Bank    of    Lake 

Fairfield    

"XJFranklin  Bank  of  Columbus. 

Franklin    .  .     .  . 

Hamilton    
Jefferson    

*-  Farmers'  &  Mechanics'  Bank 

"-  Miami  Exporting  Company.. 
Bank  of  Mt    Pleasant  

_.Bank   of   Steubenville  
Farmers'  &  Mechanics'  Bank 

Montgomery     
Muskingum     

Dayton  Manufacturing  Co.  .  . 
—  •  Zanesville    Canal    &    Manu- 

Ross 

Bank   of  Chillicothe 

Farmer  s'    &    Mechanics' 
Manufacturing     Bank     of 
Chillicothe 

<  —  Commercial  Bank  of   Scioto. 

Stark    

•^Western    Reserve   Bank  
-   Lebanon-Miami    Banking  Co. 
Bank    of   Marietta 

Trumbull    

Warren 

Washington    

—  German    Bank    of    Wooster.. 
Total   for   19  counties.. 

294,756 
581,295 

25 
25 

$2,351,127 
2,351,127 

$7.977 
4.045 

Total     for     State     (59 

*  For  location  of  towns,  see  map.  p.  16. 

77  Amount  reported   in   Gouge's  Journal   of   Banking  of   Tune  22,    1842,    page  403. 

78  Amount    paid    in    according    to    Auditor    of    State's    Report    of    Jan.    3,    1832. 
House  Journal  1832,   p.  155. 

"Amount  paid  in  according  to  statement  of  May  11,   1821,   published  in  Liberty 
Hall  and  Cin.  Gaz.  May  12,  1821. 

80  Amount  given  in  statement  by   Secretary   of  Treasury,    Levy   Woodbury,   Jan. 
5,    1836.    H.    R.    Doc.   No.   42.    24th   Cong.    1st   Sess.   p.   78. 

81 
Systems  of  the 


81  Amount    given    in    Gallatin's    "Considerations    on    the    Currency    and    Banking 
U 


nited  States,"  p.  105. 

The  proportion  of  banking  capital  to  population  would  of 
course  be  much  increased  if  statistics  of  the  unauthorized  banks 
were  available.  The  following  shows  the  condition  of  one  of  the 
best  of  the  latter  early  in  1819: 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      81 

STATEMENT   OF   BANK   OF   JOHN    H.    PIATT   AND   CO.,    CINCINNATI.82 

RESOURCES  : 

Real  estate  $87,994  00 

Bills  receivable   174,452  14 

Drafts  on  New  Orleans 68,368  68 

Drafts  on  sundry  places  and  cash  on  hand 49,096  72 

Due  from  individuals 17,852  61 

Advanced  on  the  steamboat  Gen.  Pike 14,600  00 


$412,364  15 
LIABILITIES  : 

Notes  in  circulation $242 , 783  00 

Drafts  or  bills  payable 64,514  00 

Due  depositors    19, 637  28 


$326,934  28 
Balance  in  favor  bank 85,429  87 


$412,364  15 
Secured  by  J.  H.  Piatt's  estate  valued  at 626,302  35 

It  is  impossible  to  tell  from  the  above  statement  how  much 
specie  is  held,  but  it  is  evident  that  it  is  less  than  $50,000,  and 
probably  much  less.  While  against  this  are  circulating  more 
than  $240,000  worth  of  notes  and  standing  nearly  $20,000  worth 
of  deposits.  In  other  words  the  immediate  demand  liabilities 
are  over  five  times  the  cash  on  hand !  It  is  therefore,  not  sur- 
prising to  see  in  an  issue  of  the  Watchman  for  April  15,  a  month 
later,  the  announcement  that  the  paper  of  J.  H.  Piatt  is  touched 
with  a  trembling  hand  and  that  some  shave  it  as  high  as  i2|.  A 
year  later  the  same  paper  quotes  these  notes  as  not  received  in 
Dayton  even  at  a  discount  of  75 %.83 

Depreciation  of  Ohio  Bank  Notes.  —  The  unauthorized 
banks  were  not  the  only  ones,  however,  whose  notes  were  greatly 
depreciated.  The  notes  of  the  Bank  of  Cincinnati  were  as  bad 
as  those  of  the  Piatt  .bank,84  and  those  of  several  other  author- 


83  Liberty  Hall  and  Cincinnati  Gazette,  Mar.  2,  1819. 
Ohio  Watchman    (Dayton),  Mar.  11,  1819. 
83  Ohio  Watchman   (Dayton),  June  20,  1820. 
"Ohio  Watchman  (Dayton),  June  20,  1820. 
6 


82  Ohio  Arch,  and  Hist.  Society  Publications. 

ized  banks  were  but  little  better.  The  Ohio  Watchman  of  April 
I,  1819,  says  that  the  stockholders  of  the  Belmont  Bank  had 
unanimously  agreed  that  the  concerns  of  that  company  be  closed. 

By  the  middle  of  May  several  of  the  banks  were  reported 
to  have  resumed  specie  payment,  and  it  was  said  that  their  bills 
would  then  be  received  in  payment  for  public  lands.85  But  in 
August  of  that  year  only  six  or  seven  of  the  twenty-five  char- 
tered banks  of  the  state  were  paying  specie ;  the  others  redeemed 
their  own  notes  with  the  notes  of  other  banks  or  did  not  trouble 
themselves  about  redeeming  at  all.86 

The  following  table  taken  from  the  Detroit  Gazette  in  No- 
vember 1819  indicates  somewhat,  the  condition  of  Ohio  bank 
notes  at  that  time.87 

CLASSIFICATION   OF  OHIO  BANK   NOTES,   NOVEMBER,    1819. 

1.  Bank  of  Cincinnati. 

2.  Bank  of  Lancaster. 

3.  Bank  of  Steubenville. 


4.  Farmers'  and  Mechanics'  Bank  of  Scioto. 

5.  Bank  of  Marietta. 

6.  Western  Reserve  Bank. 

7.  Bank  of  Mt.  Pleasant. 


8.  Bank  of  West  Union. 

9.  Farmers',  Mechanics',  and  Manufacturers' 

Bank  of  Cincinnati. 

10.  Bank  of  Columbus. 

11.  Bank  of  Dayton. 


Good. 


*  Decent. 


12.  Lebanon  Miami  Banking  Company. 

13.  Zanesville  Canal  and  Manufacturing  Co.       (   Middling. 

14.  Bank  of  Urbana. 

15.  Bank  of  Muskingum. 


85  Niles'  Register,  May  8,  1819,  p.  179.    Also  June  5,  1819,  p.  256. 
Ohio  Watchman,  May  20,  1819. 

88  Niles'  Register,  August  14,  1819,   p.  405.     Also  August  28,   1819, 
p.  434. 

History  of  Banking  in  All  Nations,  Vol.  I,  p.  152. 
87  Niles'  Register,  Vol.  XVII,  p.  186,   (Nov.  20,  1819). 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      83 


16.  Miami  Exporting  Company. 

17.  Piatt's  Bank. 

18.  Bank  of  Cincinnati. 

19.  Farmers'  and  Mechanics'  Bank  of  Cincin- 

nati. 


Good  for  nothing. 


Specie  Paying  Banks  of  Ohio  in  1820.  —  In  May  1820  the 
following  banks  in  Ohio  were  said  to  be  paying  specie  for  their 
notes :  Chillicothe,  Lancaster,  Marietta,  Belmont,  Mt.  Pleasant, 
Western  Reserve,  and  two  banks  at  Steubenville.  The  notes  of 
the  rest  were  generally  at  70  to  75.%  discount.  Some  of  the 
notes  of  the  Bank  of  Columbus  were  sold  at  that  rate  in  the 
town  of  Columbus  itself  about  that  time.88  In  September  the 
situation  had  not  materially  changed.  At  that  time  it  was  said 
that  the  notes  of  the  Banks  of  Chillicothe  and  Lancaster  were 
the  only  ones  in  the  state  taken  at  the  Zanesville  land  office.89 

There  was  a  general  impression  prevailing  that  the  banks 
had  specie  enough  to  redeem  their  notes  but  refused  to  do  so  for 
fear  of  emptying  their  vaults  and  causing  them  to  close  up  busi- 
ness.90 The  non-specie  paying  banks  were  frequently  charged 
with  the  practice  of  depreciating  their  own  notes  for  the  purpose 
of  buying  them  up  at  very  reduced  rates.91  In  many  cases,  banks 
whose  notes  were  greatly  depreciated  continued  to  pay  dividends. 
Thus  the  Bank  of  Cincinnati  in  May,  1819,  had  declared  a  divi- 
dend of  4%  on  its  capital  for  the  preceding  half  year.92  And 
Niles'  Register  of  June  2,  1821  reports  that  the  Columbiana 
Bank  of  New  Lisbon,  whose  notes  were  quoted  in  the  state  at 
33%  below  par,  had  just  declared  a  dividend  of  profits  for  the 
preceding  six  months.93 

All  these  things  aroused  a  good  deal  of  ill-feeling  against 
the  State  banks.  But  this  was  slight  compared  with  the  hatred 
that  existed  against  the  United  States  Bank,  which  was  looked 
upon  by  the  people  as  the  chief  cause  of  the  panic,  the  deprecia- 


88  Niles'  Register,  Vol.  XVIII,  p.  224,   (May  20,  1820). 

89  Ohio  Watchman,  Sept.  4,  1820  and  Sept.  5,  1820. 

90  Ohio  Watchman,  July  11,  1820. 

81  Niles'  Register,  Vol.  XVIII,  (July  29,  1820),  p.  399. 
83  Inquisitor  and  Cincinnati  Advertiser,  June  15,  1819. 
«*  Niles'  Register,  Vol.  XX,  p.  224. 


84  Ohio  Arch,  and  Hist.  Society  Publications. 

tion  of  state  bank  notes,  and  the  resulting  stagnation  and  distress 
which  continued  through  1820.  One  of  the  dominating  features 
of  that  period  in  Ohio  was  the  war  which  the  legislature,  backed 
by  the  people,  was  carrying  on  against  the  branches  of  the  United 
States  Bank  in  the  state. 


CHAPTER  IV. 

THE  ATTEMPT  TO  TAX  THE  BRANCHES  OF  THE  UNITED  STATES 

BANK. 

Early  State  Opposition  to  the  Bank.  —  From  its  very  be- 
ginning the  Second  Bank  of  the  United  States  had  met  with  op- 
position from  the  states  and  the  state  banks.  The  Indiana  con- 
stitution of  1816  prohibited  the  establishment  of  the  branch  of 
any  bank  chartered  outside  the  state.1  Taxes  on  the  branches  of 
the  United  States  Bank  were  laid  in  one  state  after  another: 
Maryland  led  off  in  February,  1817,  with  a  tax  of  $15,000  a  year 
on  the  Baltimore  office ;  Tennessee  followed  in  November  of  that 
year  with  a  tax  of  $50,000  on  any  bank  established  in  that  state 
under  any  but  a  Tennessee  charter ;  and  in  December  of  the  same 
year  Georgia  provided  for  a  tax  of  3i.25c  on  every  $100  of  bank 
stock  employed  within  the  state,  a  resolution  of  the  legislature 
later  declaring  that  this  tax  was  intended  to  apply  only  to  the 
branches  of  the  United  States  Bank.2 

When  the  panic  of  1818-19  occurred,  precipitated,  as  ex- 
plained in  Chapter  III,  by  the  sudden  curtailments  of  the  United 
States  Bank,  the  popular  wrath  at  once  fell  upon  the  bank.  The 
constitution  of  Illinois  framed  in  August  1818,  prohibited  the 
existence  of  any  state  banks  within  the  state.3  On  November 
30,  1818,  resolutions  were  adopted  in  the  lower  house  of  Con- 
gress demanding  an  investigation  of  the  bank  by  a  committee  of 
the  House.4  This  committee  later  reported  severely  criticizing 
the  bank's  management.5  In  December,  1818,  North  Carolina 
laid  a  yearly  tax  of  $5,000  upon  the  Fayetteville  branch.6  Then 


1  Charters  and  Constitutions  —  Ben  Perley  Poore,  Vol.  I,  p.  509. 

2  The  Second  Bank  of  the  United  States  —  Catterall,  pp.  64  and  65. 
8  Charters  and  Constitutions  —  Poore,  Vol.  I,  p.  447. 

4  Annals  of  Congress,   15th  Congress,  2nd   Session,   Part  I,  p.  335. 
6  Ibid.,  p.  552.     (Jan.  16,  1819). 
8  Niks'  Register,  Vol.  XV,  p.  367. 

(85) 


86  Ohio  Arch,  and  Hist.  Society  Publications. 

in  January,  1819,  Kentucky  imposed  the  largest  tax  of  all,  com- 
pelling each  of  the  branches  in  the  state  to  pay  annually  $6o,ooo.7 

Thus  the  Ohio  legislature,  which  followed  Kentucky's  ex- 
ample within  a  month  had  several  precedents  for  taxing  the 
bank.  Moreover,  the  same  thing  was  strongly  advocated  in  the 
Pennsylvania  legislature,  which  in  1819  petitioned  Congress  to 
take  steps  towards  amending  the  constitution  so  as  to  confine 
national  banks  to  the  District  of  Columbia.8  The  question  of 
taxing  the  branches  of  the  bank  was  debated  also  in  the  legisla- 
tures of  Virginia9  and  South  Carolina;10  and  DeWitt  Clinton, 
then  governor  of  New  York,  urged  action  upon  the  legislature 
of  that  state.11  "It  was  only  the  decisions  of  the  Supreme  Court 
in  the  cases  of  McCulloch  vs.  Maryland  and  Osborn  vs.  the  Bank 
of  the  United  States,"  says  Catterall,  "which  saved  the  bank. 
Had  it  lost  either  of  these  cases,  there  can  be  no  doubt  that  it 
would  soon  have  been  taxed  out  of  existeno*in  all  of  the  south- 
ern and  western  states."12 

Report  of  the  Joint  Committee  of  the  Ohio  Legislature  on 
the  Expediency  of  Taxing  the  Branches  of  the  United  States 
Bank.  —  As  stated  in  a  preceding  chapter,  the  ill-feeling  in 
Ohio  against  the  establishing  of  branches  of  the  United  States 
Bank  in  the  state  brought  forth  a  resolution  of  the  legislature, 
as  early  as  December  1817,  calling  for  a  report  on  the  ex- 
pediency of  taxing  those  branches.13  This  resulted  in  a  joint 
committee  of  the  two  houses  of  the  legislature,  whose  report, 
made  December  27,  i8i7,14  discusses  the  reasons  for  and  against 
taxing  and  declares  the  bank  to  be  "as  subject  to  a  tax  as  any 
corporate  body  could  be,  if  acting  under  the  authority  of  this 
state"  but  concludes  that  "it  would  still  be  impolitic  in  the  legis- 
lature of  this  state  being  one  of  the  youngest  and  most  highly 


T  Second  Bank  of  the  United  States  —  Catterall,  p.  65. 

8  Ibid. 

8  Niles'  Register,  Vol.  XIV,  p.  23,  note. 

10Niles'  Register,  Vol.  XV,  pp.  289  and  290. 

"Second  Bank  of  the  United  States  —  Catterall,  p.  65. 

"Second  Bank  of  the  United  States  —  Catterall,  p.  65. 

13  See  Chapter  II,  p.  56. 

"Ohio  House  Journal,  1818,  p.  144. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      87 

favored  in  the  Union  to  be  among  the  first  to  contravene  the 
acts  of  the  general  government."  The  report,  therefore,  con- 
cludes that  it  would  be  inexpedient  at  the  time  to  lay  such  a  tax. 

Substitute  Report  Adopted  by  the  Ohio  House  of  Repre- 
sentatives.—  The  House,  however,  rejected  this  report  and  on 
January  19,  1818,  adopted  a  substitute  report,15  the  substance  of 
which  is  as  follows :  "The  states  that  compose  the  American 
Union  are  independent  sovereign  states"  ;  their  power  "to  impose 
taxes  is  limited  by  the  constitution  of  the  United  States."  "It  is 
conceded  that  congress  has  power  to  incorporate  a  bank ;"_  but 

"the  law  establishing  this  bank attempts  not  to  confer 

upon  the  stock  of  the  company  any  exemption  from  taxation, 
either  by  the  state  or  by  the  United  States." 

"The  government  of  the  United  States  is  most  clearly  but 
an  individual  member  of  this  association,"  in  which  "the  funds 
of  the  stranger,  the  alien  and  American,  the  individual  and  the 
government  are  mingled  in  one  common  mass  and  employed  for 

the  benefit  of  all  its  members The  constitution  of  the 

United  States  has  defined  the  subjects  on  which  the  state  sov- 
ereignties shall  not  levy  taxes.  By  the  doctrines  now  set  up 
congress  may  extend  this  prohibition  at  pleasure.  They  have 
only  to  incorporate  a  company  to  merchandise  and  manufacture 
and  become  a  partner  in  the  trade,  and  the  funds  and  the  busi- 
ness are  at  once  privileged  from  the  profane  touch  of  state 
legislation." 

The  United  States  Bank  will  control  the  public  funds,  and 
"the  value  their  paper  will  acquire  in  the  market  must  enable 
them  to  monopolize  the  commercial  business  of  the  country 
and  destroy  at  their  pleasure  the  credit  of  our  own  banks.  Their 
paper  will  be  hoarded  and  applied  to  the  payment  of  our  for- 
eign debts,  instead  of  obtaining  general  circulation ;  and  for 
their  discounts  for  public  dues,  and  in  the  payment  of  debts, 
they  will  necessarily  drain  the  specie  from  the  vaults  of  the 
state  banks." 

"Whenever  the  exports  of  the  country  are  equal  to  its  im- 
ports the  complaint  of  a  depreciated  paper  currency  will  cease. 


"Ibid.,  p.  307. 


88  Ohio  Arch,  and  Hist.  Society  Publications. 

The  means  by  which  our  debts  are  changed  are  nothing  but  ex- 
pedients. It  is  only  by  liquidating  them,  that  the  country  can 
be  finally  relieved.  The  discount  on  Ohio  paper  in  the  Atlantic 
cities  is  in  fact  an  advantage  to  the  country.  It  induces  the 
merchant  to  invest  it  in  produce  at  home,  and  seek  a  market 
for  that  produce  abroad.  It  operates  as  a  premium  in  favor  of 
exportation,  and  serves  greatly  to  stimulate  industry  and  en- 
terprise. Its  natural  tendency  is  to  keep  money  in  the  country, 
and  send  out  produce,  thus  reducing  the  consumption  of  foreign 
articles  within  a  just  and  proper  boundary  and  checking  the 
propensity  to  engage  in  the  trade  of  importation."  As  a  result 
of  the  establishing  of  branches  of  the  United  States  Bank  the 
merchant  "will  export  produce  only  as  a  prospect  of  great 
profit  is  offered  to  him." 

When  this  report  came  to  a  vote,  the  House  voted  48  to  12 
that  it  would  be  constitutional  to  tax  the  branches  of  the  United 
States  Bank  within  the  state,  and  by  a  vote  of  33  to  27  declared 
that  it  was  expedient  then  to  do  so.16  But  when  the  bill  im- 
posing such  a  tax  was  read,  final  action  upon  it  was  postponed 
until  the  next  session  of  the  legislature  in  December  i8i8.17 

Hostility  to  the  Bank  Increases  in  1818.  —  Meanwhile  the 
United  States  Bank,  instead  of  heeding  the  warning  and  leav- 
ing the  state,  opened  the  second  branch  in  Ohio  at  Chillicothe  early 
in  1818,  and  in  July  increased  its  offences  by  suddenly  ordering 
the  Cincinnati  branch  to  collect  at  the  rate  of  20%  a  month 
the  large  balances  due  from  the  local  banks,  thus  precipitating 
the  panic,  causing  the  Cincinnati  banks  to  suspend  in  November 
1818,  and  bringing  disaster  and  ruin  upon  the  people.18  Conse- 
quently when  the  Ohio  legislature  came  together  again  in  De- 
cember 1818,  the  hostility  against  the  United  States  Bank,  which 
had  been  keen  the  previous  winter,  was  vastly  augmented. 

Governor  Brown,  in  his  message  of  December  16,  1818, 
recalls  the  fact  that  the  two  branches  of  the  bank  had  been  es- 
tablished within  the  state  without  leave,  but,  after  speaking  of 
the  different  positions  which  congress  at  various  times  had 


18  Ohio  House  Journal,  1818,  p.  308. 

"History  of  the  United  States  —  McMaster,  Vol.  IV,  p.  498. 

18  See  Chapter  III,  pp.  62  and  63. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      89 

taken  as  to  the  legality  of  the  bank,  advises  that  while  the  ques- 
tion remains  dubious,  the  state  should  leave  the  branches  undis- 
turbed, "rather  than  risk  any  collision  with  the  general  govern- 
ment or  hazard  the  reputation  of  the  state;  keeping  a  watchful 
eye  to  prevent  as  far  as  possible,  the  abuse  of  what  threatens  to 
become  an  almost  overwhelming  influence."  He  adds,  however, 
that  while  the  state  banks  are  taxed,  "there  appears  no  evident 
reason  why  those  branches  should  be  exempt.  Their  exemption 
would  be  a  partiality  unjust  to  the  local  banks."19 

Ohio  enacts  a  Law  taxing  the  Branches  of  the  Bank  in  the 
State.  —  Acting  upon  the  suggestion  contained  in  the  gover- 
nor's message  the  legislature  on  Feb.  8,  1819  laid  the  long 
threatened  tax,  passing  an  act  "to  levy  and  collect  a  tax  from  all 
banks  and  individuals  and  companies,  and  associations"  of  indi- 
viduals, that  may  transact  banking  business  in  this  state  without 
being  authorized  to  do  so  by  the  laws  thereof."20  This  law 
imposed  a  tax  of  $10,000  a  year  upon  individual  banking  com- 
panies not  authorized  by  the  state,  and  a  tax  of  $50,000  a  year 
upon  each  branch  of  the  United  States  Bank  within  the  state 
if  they  continued  business  after  September  15,  1819.  Upon  this 
date  the  state  auditor  was  required  to  issue  his  warrant  for  the 
collection  of  the  tax  if  the  branches  were  still  doing  business  in 
the  state,  and  if  the  bank  refused  to  pay,  the  auditor  was  au- 
thorized to  levy  on  all  money,  bank  notes,  or  other  goods  of 
the  bank. 

The  Case  of  McCulloch  vs.  Maryland.  —  This  law  was 
passed  with  great  deliberation  and  by  a  full  vote,  and  public  sen- 
timent throughout  the  state  supported  the  legislature  in  its  ac- 
tion.21 A  few  weeks  later,  however,  the  decision  in  the  famous 
case  of  McCulloch  vs.  Maryland  was  handed  down  by  the  U.  S. 
Supreme  Court,  Chief  Justice  Marshall  delivering  the  opinion 
on  March  7,  i8i9.22  This  decided  that  Congress  has  the  power 
to  incorporate  a  bank,23  that  the  bank  had  power  to  establish 


19Niles'  Register,  Vol.  XV.     Supplement,  p.  92. 

20  Laws  of  Ohio,  Vol.  XVII,  (1819),  p.  190. 

21  Bankers'  Magazine,  Vol.  IX,  p.  4. 

22  4  Wheaton  401. 

23  Ibid.,  424. 


90  Ohio  Arch,  and  Hist.  Society  Publications. 

branches  in  the  states  without  their  consent,24  and  that  the 
states  had  no  right  to  tax  them.25  In  view  of  this  decision  the 
branches  of  the  bank  in  Ohio  naturally  continued  their  opera- 
tions. 

The  State  forcibly  Collects  the  Tax  from  the  Chillicothe 
Branch.  —  The  state  law  requiring-  the  auditor  to  collect  the 
tax  on  September  15  if  the  bank  continued  its  operations  at  that 
time,  was  mandatory,  however,  and  as  the  branches  of  the  bank 
did  not  suspend  their  operations  the  state  auditor,  Ralph  Osborn, 
prepared  to  collect  the  tax.  To  prevent  this  the  bank  filed  a  Bill 
in  Chancery  in  the  U.  S.  Circuit  Court  asking  an  injunction 
to  restrain  the  auditor  from  proceeding  to  collect  the  tax.  A 
copy  of  this  bill  with  a  subpoena  to  answer  was  served  on  the 
Auditor.26  The  latter  upon  legal  advice  refused  to  appear  on 
the  day  named  in  the  writ,  and  the  court  allowed  an  injunc- 
tion,27 but  required  $100,000  bond  of  the  bank,  which  was  given. 

As  the  day  for  collection  approached  the  bank  sent  an 
agent  to  Columbus  who,  early  on  the  morning  of  September  15, 
served  on  the  Auditor  a  copy  of  the  petition  for  an  injunction 
and  a  subpoena  to  appear  before  the  court  at  a  subsequent  date.28 
But  as  he  had  no  copy  of  the  writ  of  injunction  which  had  been 
allowed,  the  auditor  sent  to  the  secretary  of  state  the  copy  of 
the  petition  and  the  subpoena  together  with  a  warrant  for  col- 
lecting the  tax,  asking  the  secretary,  who  was  then  at  Chillicothe, 
to  take  legal  advice,  and  if  the  papers  did  not  amount  to  an  in- 
junction, to  have  the  warrant  executed,  but  if  they  did  to  return 
it. 

The  counsel  advised  that  the  papers  did  not  amount  to  an 
injunction ;  and,  therefore,  the  state  writ  was  given  to  the  sheriff, 
John  L.  Harper,  with  instructions  to  enter  the  banking  house  and 


24  4  Wheaton  425. 

25  Ibid.,  437. 

26  Hist,  of  U.  S.  — McMaster,  Vol.  IV,  p.  498. 
Niles'  Register,  Vol.  XVII,  p.  86. 

9  Wheaton  738. 

2TThe  writ  of  injunction  was  not  issued  until  Sept.  18. 

9  Wheaton  741. 

28  Ibid. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.^     91 

demand  payment  of  the  tax,  and  upon  refusal  thereof  to  enter 
the  vault  and  levy  the  amount  required.  The  officer  was  di- 
rected to  use  no  violence,  but  if  he  was  opposed  by  force  to  go 
at  once  before  a  proper  magistrate  and  depose  to  the  fact.  So 
the  officer  taking  with  him  a  horse  and  wagon  and  competent 
assistants  went  to  the  bank  on  the  evening  of  September  17  and, 
first  securing  acess  to  the  vaults,  demanded  the  tax.  1'ayment 
was  of  course  refused  and  notice  given  of  the  injunction  which 
had  been  granted.  But  the  officer  disregarding  this  notice  en- 
tered the  vault  and  seized  in  gold,  silver,  and  bank  notes,  suffi- 
cient funds  to  cover  the  amount  of  the  tax  on  both  branches 
$100,000.  This  was  carried  in  the  wagon  to  the  Bank  of  Chil- 
licothe  and  deposited  there  over  night.29 

The  next  day  another  writ  was  issued  by  the  court  against 
the  auditor,  Osborn,  and  Harper,  restraining  them  from  pay- 
ing over  the  money  or  making  report  of  its  collection  to  the 
legislature.  Harper  was  on  his  way  to  Columbus  with  the 
money  in  the  wagon  when  served  with  this  writ.30  It  was  also 
served  on  Osborn  before  Harper  reached  Columbus.  The  writ 
was  disregarded,  however,  and  though  no  part  of  the  money 
ever  came  into  Osborn's  hands,  Harper  retained  $2,000  for  fees 
and  paid  the  balance  $98,000  over  to  the  state  treasurer  H.  M. 
Curry,31  who  received  it  but  kept  it  separate  from  the  other 
state  funds.32 

Arrest  and  Trial  of  State  Officials  concerned  in  Collecting 
the  Tax.  —  The  United  States  Bank  immediately  instituted 
suits  against  Osborn  and  others  for  contempt,  for  trespass,  and 
to  recover  the  money  seized.33  Harper  and  Thomas  Orr  who 


29  Bankers'   Magazine,   Vol.   IX,   p.  4. 
Auditor  of  State's  Report,  Dec.  5,  1821. 
9  Wheaton  835. 

30  9  Wheaton  741. 

Ohio  Sen.  Jour.,  1822,  p.  54. 

81  History  of  the  United  States  —  McMaster,  Vol.  IV,  p.  499. 

32  Report  of  State  Treas.  Sam'l  Sullivan,  Dec.  4,  1820. 
Laws  of  Ohio,  Vol.  XIX,   (1821). 

33  Second   Bank  of  the  United   States  —  Catterall,  p.  90. 


92  Ohio  Arch,  and  Hist.  Society  Publications. 

aided  him  were  arrested  by  a  deputy  marshal  and  imprisoned.34 
They  were  afterwards  discharged,  however,  by  the  circuit  court 
at  the  trial  in  January  1820,  the  arrest  said  to  have  been  illegal 
owing  to  a  technicality.    On  January  7,  1820,  the  auditor,  Ralph 
Osborn,  was  served  with  a  notice  that  the  U.  S.  Circuit  Court 
had  granted  a  rule  against  him  and  John  L.  Harper  to  show 
cause   why   an   attachment   should   not   issue   against   them    for 
contempt   of    court   in    disregarding   the   injunction.      The   case 
was   continued  until  the  September   1820  term  of  court,  when 
Judge  Todd  ordered  the  attachment  to  issue  returnable  on  the 
first  day  of  the  January  term  of  the  court  in  1821. 35    The  court 
also,  at  the  September  term,  ordered  the  $98,000  stayed  in  the 
state  treasury  in  the  hands  of  Samuel  Sullivan,  who  had  suc- 
ceeded Curry  as  state  treasurer  on  February  17,  i82O.36    An  at- 
tachment for  contempt  was  also  awarded  against  Sullivan  and  he 
failing  to  answer  was  taken  into  custody  by  the  marshal  of  the 
district  and  placed  in  confinement  until  the  case  was  appealed 
to  the  Supreme  Court  in  i82i.37 

Excitement  over  the  Affair.  —  Meanwhile  excitement  ran 
high  over  the  matter,  not  only  in  Ohio  but  throughout  the  coun- 
try generally.     And  both  sides  of  the  controversy  found  plenty 
of  advocates.     The  president  of  the  U.  S.  Bank,  Cheves,  was 
furious.    "The   outrage/'   he   asserted   in   a   letter  to    Secretary 
Crawford  September  20,  1819,  "......   can  be  rarely  paralleled 

under  a  government  of  law,  and,  if  sustained  by  the  higher  au- 
thorities of  the  State  strikes  at  the  vitals  of  the  Constitution."38 
The  governor  of  Ohio  did  all  in  his  power  to  have  the  money 
restored,  even  offering  to  give  security  for  it,  but  he  could 
accomplish  nothing.  He  declared,  "I  view  the  transaction  in  the 


34  Orr  afterwards  claimed  damages  from  the  state  for  this  confine- 
ment, and  a  legislative  committee  reported  Feb.  20,  1824  that  they  con- 
sidered his  claim  just  and   recommended  that  he  be   allowed  $100  and 
costs.  — Ohio  Senate  Jour.,  1824,  p.  301. 

35  State  Auditor's  Report  of  Dec.  5,  1820.  —  Ohio  House  Jour.,  1821, 
p.  46.    Also  History  of  U.  S.  —  McMaster,  Vol.  IV,  p.  500. 

86  9  Wheaton  742. 

37  State  Auditor's  report  of  December  5,  1821.  —  Ohio  Senate  Journal, 
1822,  p.  53. 

38  Second  Bank  of  the  United  States  —  Catterall,  p.  89. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      93 

most  odious  light,  and  from  my  very  soul  I  detest  it.  . 

I  am  ashamed  it  has  happened  in  Ohio."39  The  Inquisitor  and 
Cincinnati  Advertiser  of  October  19,  1819  printed  numerous 
extracts  from  other  papers  regretting  that  Ohio  in  defiance  of 
the  U.  S.  Constitution  had  entered  the  vaults  of  the  branch  bank 
at  Chillicothe  and  taken  therefrom  nearly  $100,000.  Another 
Cincinnati  paper  commenting  on  the  affair  about  the  same  time 
remarks  that  it  "appears  to  have  created  as  much  consternation 
as  if  it  had  been  an  overt  act  of  treason  or  rebellion,"  but  adds, 
"If  the  general  government  can  create  a  monied  institution,  in 
the  very  bosom  of  the  states,  paramount  to  their  laws,  then  in- 
deed is  state  sovereignty  a  mere  name,  'full  of  sound  and  fury, 
signifying  nothing.'  "40  In  general,  public  opinion  in  Ohio  at 
the  time  supported  the  state  officials  for  enforcing  the  state  law 
against  the  bank. 

Ohio  Elections  in  Fall  of  1819  influenced  by  the  Bank 
Fight.  —  The  elections  in  Ohio  that  fall  were  along  the  lines 
of  the  United  States  Bank  fight.  One  candidate  for  the  State 
Senate  and  one  for  the  House  came  forth  with  a  parody  en- 
titled the  "Declaration  of  Independence  against  the  United 
States  Bank,"  in  which  the  bank  was  charged  with  "having  quar- 
tered large  bodies  of  armed  brokers  among  them,"  etc.  This,  in 
conclusion,  proclaimed  that  "all  connection  between  the  people 
of  Ohio  and  the  branch  banks  ought  to  be  dissolved,  and  that 
as  a  free  and  independent  state  we  have  full  power  to  levy  a  tax 
upon  all  banks  within  our  jurisdiction  of  whatsover  denomina- 
tion and  by  whomsoever  established,"  etc.41 

General  Harrison,  a  candidate  for  state  senator  from  the 
Cincinnati  district  declared  himself  the  enemy  of  banks  in  gen- 
eral and  especially  of  the  United  States  Bank,  which  he  said  he 
viewed  as  an  institution  "which  may  be  converted  into  an  im- 
mense political  engine  to  strengthen  the  arm  of  the  general 
government  and  which  may  at  some  future  day  be  used  to  oppress 
and  break  down  the  state  governments."  Yet  of  the  Ohio  act 
he  said,  "Is  it  not  a  shoot  that  has  sprung  from  its  far  famed 


39  History  of  Banking  in  All  Nations,  Vol.  I,  p.  153. 

40  Liberty  Hall  and  Cincinnati  Gazette,  Oct.  5,  1819. 
"Niles'  Register,  Oct.  30,  1819,  p.  139. 


94  Ohio  Arch,  and  Hist.  Society  Publications. 

Boston  opposition,  and  been  matured  in  the  foul  mine  of  the 
Hartford  Convention?"42  He  was  elected. 

Hard  Times  increase  Hostility  to  the  Bank.  —  The  hard 
times  then  prevalent,  too,  added  to  the  feeling  against  the  United 
States  Bank.  All  the  fine  visions  of  the  speculators,  the  paper- 
money  men,  the  bank  men,  had  vanished.  Bankruptcy  and  debt 
were  every  where.  Stay  laws,  replevin  laws,  indorsement  laws, 
relief  laws  of  every  sort  were  the  order  of  the  day.  Nothing 
was  so  hateful  just  then  as  a  bank,  and  above  all  the  Bank  of  the 
United  States.43  In  liquidation  of  debts  in  1818-19  the  United 
States  Bank  had  been  forced  to  accept  a  great  deal  of  western 
real  .estate,  which  was  taken  at  low  valuations  but  afterwards 
increased  greatly  in  value  owing  largely  to  the  rapid  growth  of 
Cincinnati.  On  account  of  these  real  estate  acquisitions,  the 
bank  came  to  own  a  large  part  of  Cincinnati.  Hotels,  coffee- 
houses, stores,  stables,  warehouses,  iron-foundries,  residences, 
and  vacant  lots  were  numbered  among  the  bank's  holdings.  It 
also  owned  over  50,000  acres  of  good  farm  land  in  Ohio  and 
Kentucky.  These  possessions  of  course  maddened  their  former 
owners.44 

Report  of  the  Special  Committee  of  the  Ohio  Legislature. 
—  When  the  Ohio  legislature  met  in  December  1820  the  feeling 
against  the  United  States  Bank  was  at  its  height.  The  report 
of  the  state  auditor,  December  5,  1820,  in  regard  to  the  collec- 
tion of  the  tax. from  the  branches  of  the  bank  was,  upon  motion 
of  Mr.  Hammond  of  the  House,  referred  to  a  joint  committee 
and  an  investigation  was  begun.45 

This  special  committee  made  its  report  on  December  12, 
1820.  This  report  occupies  33  pages  of  the  House  Journal.46 


42  Ibid. 
43  See  article  by  J.  B.  McMaster  in  The  Forum  for  April  1895,  p.  167. 

44  Sen.  Doc.  No.  98,  22nd  Congress,  1st  Session,  pp.  22-36. 
Second  Bank  of  the  U.  S.  —  Catterall,  pp.  66  and  67. 

45  Ohio  House  Journal,  1821,  p.  47. 

46  Ohio  House  Journal,  1821,  pp.  99  to  132. 

In  discussing  the  litigation  against  the  Ohio  Life  Insurance  and 
Trust  Co.,  in  his  report  of  1852-3,  the  auditor  of  state,  Wm.  D.  Morgan, 
refers  to  the  Charles  Hammond  report  as  "the  ablest  state  paper  prob- 
ably to  be  found  in  our  legislative  records." 


Banking  and  Currency  in  O^hio  Before  the  Civil  War,      95 

Mr.  Hammond,  chairman  of  the  committee,  recites  the  main 
facts  of  the  proceedings  and  adds,  "In  everything  but  the  name 
the  state  is  the  actual  defendant."47  The  Supreme  Court  had 
decided  that  a  state  law  taxing  the  branches  of  the  United  States 
Bank  was  unconstitutional.48  As  to  this  Mr.  Hammond  proceeds, 
"The  committee  are  aware  of  the  doctrine  that  the  federal  courts 
are  exclusively  vested  with  jurisdiction  to  declare,  in  the  last 
resort,  the  true  interpretation  of  the  Constitution  of  the  United 
States.  To  this  doctrine,  in  the  latitude  contended  for,  they  can 
never  give  assent."  They  contended  that  the  Federal  courts 
are  not  the  sole  expositors  of  the  Constitution  but  share  that 
power  with  the  states  themselves,  holding  that  the  question  had 
been  settled  by  an  authority  from  which  there  can  be  no  ap- 
peal— the  authority  of  the  people  themselves. 

As  an  instance  of  this  they  maintained  that  as  early  as  1798 
the  passage  of  the  Alien  and  Sedition  Laws,  and  certain  decis- 
ions of  the  Federal  Courts  recognizing  the  obligatory  force  of 
the  common  law,  made  an  expression  of  popular  opinion  on  this 
question  necessary,  and  that  such  an  expression  was  sent  forth 
by  Kentucky  and  Virginia.  These  famous  resolutions,  said  the 
committee,  were  a  direct  and  constitutional  appeal  to  the  States 
and  to  the  people  on  the  great  question  at  issue,  ami  the  appeal 
was  decided  in  the  elections  of  1800.  For  then,  proceeds  the 
committee,  "The  states  and  the  people  recognized  and  affirmed 
the  doctrines  of  Kentucky  and  Virginia  by  effecting  a  total 
change  in  the  administration  of  the  federal  government."  + 

"The  high  authority  of  this  precedent,"  says  the  committee, 
"imposes  a  duty  on  the  state  from  which  it  can  not  shrink  with- 
out dishonor.  So  long  as  one  single  constitutional  effort  can 
be  made  to  save  them,  the  state  ought  not  to  surrender  its  rights 
to  the  encroaching  pretensions  of  the  circuit  court." 


*7On  December  22,  1821,  a  legislative  committee  to  whom  had  been 
referred  the  governor's  message  relative  to  the  U.  S.  Bank  case  reported 
recommending  a  resolution  that  the  legislature  protest  against  the  pro- 
ceedings of  the  federal  court  indirectly  making  the  state  a  defendant  as 
violating  the  llth  Amendment  to  the  U.  S.  Constitution.  —  Ohio  Senate 
Journal,  1822,  p.  118. 

4SMcCulloch  vs.  Maryland  — 4  Wheaton  437. 


96  Ohio  Arch,  and  Hist.  Society  Publications. 

As  to  the  opinion  that  the  decision  in  the  case  of  McCulloch 
vs.  Maryland,49  given  between  the  date  of  the  passage  of  the 
law  and  the  day  it  went  into  effect,  made  it  the  duty  of  Ohio  to 
acquiesce,  the  committee  cited  the  cases  of  Marbury  vs.  Madi- 
son** and  Fletcher  vs.  Peck™  to  show  that  "neither  in  theory 
nor  in  practice  is  this  the  necessary  consequence  of  a  decision 
of  the  Supreme  Court,"  and  said,  "Are  not  these  two  cases  evi- 
dence that  in  great  questions  of  political  right  and  political 
powers  a  decision  of  the  Supreme  Court  is  not  conclusive  of  the 
rights  decided  by  it?" 

Recommendations  and  Resolutions  offered  by  the  Com- 
mittee. —  The  committee  held  that  with  such  examples  the 
state  should  go  on  in  defiance  of  the  Supreme  Court  "and  as- 
certain distinctly  if  the  Executive  and  Legislative  departments 
of  the  Government  of  the  Union  will  recognize,  sustain,  and 
enforce  the  doctrine  of  the  Judicial  department."  As  a  means 
of  testing  this  they  recommend  that  the  legislature  should  enact 
laws  making  the  United  States  Bank  an  outlaw  in  Ohio. 

The  committee  also  offered  resolutions :  approving  the  doc- 
trines of  the  Kentucky  and  Virginia  Resolutions  of  1798-9;  as- 
serting the  right  of  a  state  to  tax  private  corporations  of  trade 
chartered  by  Congress  and  doing  business  within  the  state;  de- 
claring that  the  United  States  Bank  was  a  private  corporation 
of  trade,  the  capital  and  business  of  which  might  be  legally 
taxed  in  any  state  where  they  might  be  found;  and  protesting 
against  the  doctrine  that  the  political  rights  of  the  separate  states 
and  their  powers  as  sovereign  states  could  be  settled  by  the  Su- 
preme Court  of  the  United  States  in  cases  between  individuals 
and  in  which  no  state  was  a  party  direct.52 

The  Ohio  Legislature  re-affirms  the  Kentucky  and  Vir- 
ginia Resolutions  and  Outlaws  the  United  States  Bank.  —  The 
suggestions  offered  by  this  joint  committee  met  with  the  ap- 
proval of  both  houses,  the  legislature  adopting  the  resolutions, 


"Delivered  Mar.  7,   1819  —  4  Wheaton  401. 
50 1   Cranch   137-180. 

61  6  Cranch  87-148. 

62  Ohio  House  Journal,  1821,  pp.  99  to  132. 

History  of  the  United  States  —  McMaster,  Vol.  IV,  pp.  500  to  503. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      97 

which  reaffirmed  the  doctrines  of  the  Kentucky  and  Virginia 
Resolutions,53  and  on  January  29,  1821  passing;  an  "Act  to  with- 
draw from  the  Bank  of  the  United  States  the  protection  and  aid 
of  the  laws  of  this  state,  in  certain  cases."54  This  law  gave  the 
bank  the  alternative  either  of  consenting  to  pay  4%  of  its  divi- 
dends from  its  branches  in  Ohio  as  a  tax  to  the  state,  or  of 
withdrawing  the  offices.55 

On  February  2  of  the  same  year  the  legislature  passed  an 
act  providing  that  the  state  would  return  $90,000  of  the  $98,000 
seized  from  the  bank  and  treat  its  branches  like  the  other  banks 
in  the  state,  if  it  should  give  notice  to  the  governor  of  its  will- 
ingness to  stotp  the  suits  against  the  state  officers  and  to  submit 
to  a  tax  of  4%  on  its  annual  dividends,  $2,500  to  be  collected 
annually  until  the  bank  should  report  its  actual  dividends.56  If 
the  bank  should  accept  these  terms,  the  governor  was  authorized 
to  suspend  the  "outlaw"  act  by  proclamation. 

But  the  bank  was  inflexible.  It  neither  withdrew  its 
branches  from  the  state,  nor  discontinued  its  suits  against  the 
state  officers.  On  July  9,  1821  the  United  States  Circuit  Court 
for  Ohio  served  the  state  auditor  with  a  petition  and  subpoena 
in  chancery,  and  an  injunction  enjoining  him  from  levying  and 
collecting  the  tax  of  $2,500  provided  for  in  the  law  of  February 
2,  1821. 57  The  following  September  the  same  court  decreed  that 
$100,000,  with  interest  on  $19,380,  the  amount  of  specie  held  by 
the  state  treasurer,  should  be  restored  to  the  bank.58  The  ap- 
peal to  the  Supreme  Court  was  then  perfected  by  the  defendants 
for  the  $2000,  with  the  interest  and  costs,  the  actual  amount 
turned  into  the  state  treasury  having  been  only  $98,ooo.59 


53  History  of  the  United  States  —  McMaster,  Vol.  IV,  p.  502. 
"Laws  of  Ohio  XIX,   (1821),  p.  108. 
Revised  Statutes  of  Ohio  — Chase,  p.  1185. 

56  This  act  was  repealed  Jan.  18,  1826  — Laws  of  Ohio,  Vol.  XXIV, 
(1826),  p.  24.     Chase's  Rev.  Stat.,  p.  1592. 

History  of  Banking  in  All  Nations,  Vol.  I,  p.  155. 

56  Laws  of  Ohio,  Vol.  XIX,   (1821),  p.  173.     Chase's  Rev.  Stat,  p. 
1198. 

57  Ohio  State  Auditor's  Report  on  U.  S.  Bank  Case,  Dec.  5,  1821. 

68  9  Wheaton  744. 

69  Niles  Register,  Vol.  XXI,  p.  75.     Ohio  Senate  Jour.,  1822,  p.  53. 

7 


98  Ohio  Arch,  and  Hist.  Society  Publications. 

And,  since  the  bank  had  not  discontinued  its  suits  nor  with- 
drawn from  the  state,  the  law  of  January  29,  1821  went  into 
effect.  Thus  in  September  1821,  the  Bank  of  the  United  States 
became  an  outlaw  in  Ohio. 

What  this  meant  is  well  described  by  Professor  McMaster 
thus:  "Every  jailor  was  forbidden  to  receive  into  his  custody 
any  person  committed  at  the  suit  of  the  bank,  or  for  any  injury 
done  to  it.  Every  judicial  officer  was  prohibited  to  take  ac- 
knowledgment of  conveyances  when  the  bank  was  a  party,  and 
every  recorder  from  receiving  and  entering  them.  Notaries- 
public  were  prevented  from  protesting  bills  or  notes  held  by  the 
bank  and  made  payable  to  it;  and  justices  of  the  peace,  judges, 
and  grand  juries  could  no  longer  take  cognizance  of  any  wrong 
committed  on  the  property  of  the  bank,  though  it  were  burglary, 
robbery,  or  arson."80 

The  Case  of  Osborn  vs.  the  United  States  Bank.  —  Thus 
during  the  pending  of  the  appeal  from  the  circuit  court's  deci- 
sion, the  bank  was  deprived  for  a  time  of  the  aid  of  the  state  laws 
in  the  collection  of  its  debts  and  in  the  usual  protection  of  its 
legal  rights.  These  were  extreme  measures.  But  the  doctrine 
of  state's  rights  was  still  dominant  in  Ohio.  The  people  of  the 
state  looked  upon  the  bank  as  a  foreign  corporation  organized  for 
profit,  doing  business  within  the  state  against  the  will  of  the 
state,  and  paying  no  taxes, — a  virtual  monopoly  within  the  state 
yet  not  subject  to  state  jurisdiction.  Why,  said  they,  should  the 
state  be  expected  to  protect  persons  and  property  over  which  it 
had  no  control,  especially  when  they  were  not  willing  to  pay 
anything  for  such  protection? 

The  controversy  between  the  state  and  the  bank  did  not 
end  until  1824,  when  the  case  of  the  bank  against  the  state  offi- 
cers, which  had  been  carried  up  to  the  Supreme  Court  of  the 
United  States  on  appeal  by  the  defendants,  was  finally  decided 
in  the  famous  case  of  Osborn  vs.  the  United  States  Bank*1  This 
case  is  one  of  the  important  ones  in  the  history  of  the  country, 
as  is  attested  by  the  large  number  of  court  decisions  in  which  it 


60 The  Forum,  April  1895.     (Article  by  J.  B.  McMaster). 
Money  and  Banking  —  White,  pp.  284  and  285. 
91 9  Wheaton  738-903. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.      99 

has  been  cited.  Together  with  the  case  of  McCulloch  vs.  Mary- 
land, decided  five  years  before,  it  may  be  said  to  have  estab- 
lished and  defined  the  law  of  the  national  banks  as  agencies  of 
the  federal  government,  their  right  to  sue  and  be  sued  in  the 
federal  courts,  and  their  freedom  from  state  taxation.62 

In  this  case  the  state  officers  were  represented  by  Charles 
Hammond  and  others,63  while  such  men  as  Clay,  Webster,  and 
Sergeant  appeared  for  the  bank.64  The  appellants  argued  that 
since  in  everything  but  name  the  state  of  Ohio  was  the  real 
defendant,  the  courts  did  not  have  jurisdiction,  as  the  nth 
Amendment  to  the  United  States  Constitution  restrained  suits 
against  a  state  by  citizens  of  another  state.  The  court  held, 
however,  that  the  nth  Amendment  restraining  suits  against 
states  is  of  necessity  limited  to  suits  where  a  state  is  a  party 
on  the  record,  and  that  a  suit  may  be  maintained  to  enjoin  a 
state  auditor  from  collecting  an  unlawful  tax,  where  a  state  is 
not  made  a  party  on  the  record,  although  exclusively  interested 
in  the  subject-matter  of  the  suit.65 

The  decision  in  this  case  also  as  in  the  case  of  McCulloch 
vs.  Maryland,  denied  the  right  of  a  state  to  tax  the  branches  of 
the  United  States  Bank.  The  validity  of  the  decision  was  based 
on  the  principle  that  the  bank  was  not  a  private  corporation  for 
individual  trade  and  profit,  but  a  public  corporation  created  as 
an  instrument  for  carrying  into  effect  the  constitutional  powers 
of  the  national  government.  As  such,  its  business  of  banking 
and  its  trade  was  decided  to  be  exempt  from  state  taxation,  al- 
though its  local  property  might  be  taxed,66  the  court  holding 
that  all  instrumentalities  created  by  Congress,  necessary  and 
proper  for  carrying  into  effect  the  powers  vested  in  the  national 
government  are  free  from  state  control.67 


855  Notes  on  U.  S.  Reports  —  Rose,  Vol.  II,  p.  338. 

83  Hammond's    associates    were    Harper,    Brown,    and    Wright  — 9 
Wheaton  744  and  804. 

84  Ibid.,  795  and  804. 
65  9  Wheaton  857. 

88  Ibid.,   860-867. 

87  Ibid.,  865  and  866. 


100  Ohio  Arch,  and  Hist.  Society  Publications. 

The  opinion  of  the  court  in  the  case  of  Osborn  vs.  the 
United  State  Bank  was  delivered  by  Chief-Justice  John  Marshall 
on  March  19,  i824.68  It  affirmed  the  decree  of  the  circuit  court 
as  to  the  return  of  the  $98,000  by  the  state  and  as  to  the  re- 
turn of  the  remaining  $2000  by  Ofeborn  and  Harper,  but  held 
that  the  lower  court  was  erroneous  as  to  the  residue,  that  in- 
terest should  not  be  charged  on  the  money  while  in  the  hands 
of  the  state  treasurer,  since  the  court  had  enjoined  him  from 
using  it  in  any  way.69. 

The  People  of  Ohio  submit  to  the  Decision  of  the  Supreme 
Court.  —  By  the  time  this  decision  had  been  handed  down  a 
reaction  had  begun  in  Ohio.  The  good  sense  of  the  plain  people 
had  prevailed,  notwithstanding  the  radical  declarations  of  the 
legislators.  The  people  chose  to  abide  by  the  decision  of  the 
Supreme  Court.  On  January  28',  1826  the  law  making  the  Bank 
of  the  United  States  an  outlaw  in  Ohio  was  erased  from  the 
statute  books.70  And  the  bank  unmolested  continued  to  do 
business  in  Ohio  until  the  expiration  of  its  charter  in  i836.71 


88  9  Wheaton  816.  Justice  Johnson  dissenting  as  to  jurisdiction.— 
Ibid.,  871. 

69  Ibid.,  837  and  871. 

70  Revised  Statutes  —  Chase,  p.  1522. 

71  The  bill  to  repeal  the  "outlaw"  act  was  read  the  third  time  in  the 
Senate,  Jan.   10,  having  previously  passed  the  House;  but  the  question 
for  its  final  passage  was  postponed  in  consequence  of  the  production  of  a 
letter  from  the  agent  of  the  bank  to  the  recorder  of  Clermont  County 
threatening  the  officer  with  prosecution  and  ruin,  if  he  should  not  produce 
the  repeal  of  the  act  — Niles'  Register,  Vol.  XXIX  (Feb.  4,  1826),  p.  369. 

Immediately  thefeafter,  however,  on  March  14,  1836,  the  legislature 
passed  an  act  "to  prohibit  within  this  state  any  branch  office  or  agency  of 
the  United  States  Bank  as  recently  chartered  by  the  legislature  of  Penn- 
sylvania," holding  that  "the  general  welfare  of  this  State  forbids  the 
establishment  within  its  limits  of  any  such  branch.  —  Laws  of  Ohio,  Vol. 
XXXIV.  (1836).  p.  37. 

This  act  was  repealed  Jan.  28,  1838.  — Gen.  Laws  of  Ohio,  Vol. 
XXXVI.  p.  14.  But  a  new  law  of  Jan.  9,  1839,  prohibited  the  establish- 
ing in  the  State  of  any  branch  or  agency  of  the  United  States  Bank  of 
Pennsylvania  or  of  any  other  bank  incorporated  by  another  State  or  by 
the  United  States.  —  General  Laws  of  Ohio,  Vol.  XXXVII,  p.  10. 

This  law  remained  in  force  until  March  12,  1845.  —  General  Laws  of 
Ohio,  Vol.  XLIII,  p.  88. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    101 

Professor  McMaster,  in  commenting  on  the  outcome  of  the 
United  States  Bank  controversy  in  Ohio  and  the  similar  contest 
in  Kentucy,  philosophically  remarks :  "Both  in  Kentucky  and 
Ohio  the  cases  were  extreme;  yet  they  are  striking  illustrations 
of  the  fact  that  in  this  country  all  questions  of  great  impor- 
tance are  finally  settled  not  by  Presidents,  nor  by  Congresses, 
nor  by  Legislatures  of  the  States,  but  by  the  hard  common 
sense  of  the  people,  who  in  their  own  good  time  and  way  have 
heretofore  adjusted  all  differences  wisely."72 


"The  Forum,  April,  1895,  Vol.  XIX,  p.  168. 


CHAPTER  V. 
PERIOD  OF  DEPRESSION  AND  RECOVERY,  1820-1830, 

Depression  and  Low  Prices  in  the  Early  2o's.  —  In  Ohio 
the  stagnation  and  distress  following  the  Crisis  oi  1818-19  con- 
tinued without  relief  through  1820  and  1821  and  well  into  1822. 
In  the  latter  year  some  improvement  was  noticed.  Governor 
Trimble,  in  his  message  of  December  12,  1822,  remarked,  "The 
industry,  frugality,  and  rigid  economy  so  generally  observed  are 
gradually  relieving  the  country  from  embarrassment,  and  the 
agricultural,  manufacturing,  and  commercial  interests  of  the 
State  are  manifestly  improving."1  The  improvement  was  but 
slight,  however,  and  did  not  last  long.  Prices  remained  at  an 
extremely  low  level.2  Another  Ohio  governor  writing  later  of 
these  years  declares  that  business  and  prices  were  prostrated 
"without  parallel  in  the  history  of  this  country."3 

In  the  Miami  Country,  the  best  farming  section  of  the  state, 
produce  sold  at  minimum  prices  in  the  fall  and  winter  of  1822- 
23,  many  of  the  most  important  articles  not  paying  the  farmer 
more  than  a  fair  compensation  for  taking  them  to  Cincinnati. 
Pork  was  sold  in  large  quantities  for  from  one  to  two  dollars 
per  hundred.  And  it  was  generally  understood  in  that  section 
that  most  kinds  of  provisions  shipped  from  Cincinnati  market 
that  season  involved  almost  all  the  shippers  in  loss,  and  some 
of  them  in  total  bankruptcy  and  ruin.  During  the  fall  and  win- 
ter of  1823-4  but  little  over  half  the  provisions  were  shipped 
from  that  market  that  were  the  year  before.4  For  example,  in 
1822  over  42,000  barrels  of  flour  were  inspected  at  Cincinnati  for 
export;5  while  in  1823  the  quantity  amounted  to  but  27,206 


1  Liberty  Hall  and  Cincinnati  Gazette,  Dec.  14,  1822. 

2  See  Chapter  III,  p.  70.    Also  Miles'  Register,  Vol.  XXI,  p.  381. 
'Governor   Shannon's  message  —  Ohio   Executive   Documents,   1840, 

No.  1,  p.  16. 

4  Liberty  Hall  and  Cincinnati  Gazette,  May  18,  1824. 
6  Valued  at  $3  a  barrel.—  Ibid.,  Jan.  21,  1823. 

(102) 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    103 

barrels.6  Niles'  Register  of  October  23,  1824  contains  the  state- 
ment that  "Any  quantity  of  corn  may  be  purchased  in  Cincinnati 
for  8c  per  bushel."7 

In  other  parts  of  the  state  prices  were  as  low  or  even  lower. 
Thus  in  Dayton  in  1822,  flour  was  $2.50  a  barrel,  wheat  2oc  a 
bushel,  corn  I2c,  and  whiskey  I2^c  a  gallon.8  In  Delaware  in 
1823  pork  was  $2.50  a  hundred.9  In  Steubenville  in  1823, 
whiskey  was  i6c  a  gallon.10  In  Chillicothe  in  1823  wheat  was 
5oc  a  bushel,11  while  in  January  1824  wheat  was  5oc,  corn  20 
and  25c,  and  whiskey  25  and  3oc  a  gallon.12  Yet  Chillicothe  had 
access  by  river  to  the  New  Orleans  market. 

Thomas  Worthington,  writing  in  1824,  says,  " Wheat  has 
varied  in  price  for  some  years  back  from  25  to  5Oc.  The  aver- 
age price  has  not  for  5  or  6  years  back  exceeded  374c."13  And 
another  writer  from  central  Ohio  says  in  1825,  "Many  of  the 
farmers  of  this  county  (Licking  Co.)  are  turning  their  attention 
to  the  raising  of  tobacco — to  do  which  they  are  absolutely  com- 
pelled, by  the  reduced  price  of  wheat,  which  brings  them  only 
3 ic  per  bushel."14  All  over  the  state  the  prices  of  produce 
were  very  low. 

In  fact,  while  on  the  seaboard  there  was  bank  expansion  in 
1823  and  24  accompanied  or  followed  by  a  rise  of  property  and 
general  briskness  of  business,  and  the  expectation  of  a  grand 
era  of  prosperity  to  follow  the  new  tariff  law  of  1824,  yet  in  the 
interior  the  consequences  of  the  great  reaction  of  1818-19  were 


8  Cincinnati  Daily  Gazette,  Jan.  4,  1828.  This  paper  also  gives  the 
number  of  barrels  inspected  for  export  in  1824  as  29,560  barrels;  in  1825 
as  45,005  barrels ;  in  1826  as  45,370  barrels,  and  in  1827  as  58,551  barrels. 
There  were  supposed  in  the  latter  year  to  have  been  15,000  barrels  not 
inspected. 

7  Niles'  Weekly  Register,  Vol.  27,  p.  123. 

8  History  of  Montgomery  County,  p.  343. 

9  Delaware  Patron,  April  16,  1823. 

10  Western  Herald  and  Steubenville  Gazette,  Nov.  8,  1823. 
"The  Supporter  and  Scioto  Gazette,  Nov.  22,  1823. 

12  Ibid.,  Jan.  10,  1824. 

13  The  Supporter  and  Scioto  Gazette,  Sept.  16,  1824. 

14  St.  Clairsville  Gazette,  Sept.  17,  1825. 


104  Ohio  Arch,  and  Hist.  Society  Publications. 

not  over  in  i825.15  In  Kentucky  there  was  anarchy  yet.  Ala- 
bama and  Tennessee  notes  were  at  a  discount.  Indiana,  Illinois, 
and  Missouri  were  still  suffering  from  the  relief  system.16  And 
in  Ohio  there  was  general  depression  of  prices  and  business.17 

Dullness  in  Land  Sales  and  Lack  of  Immigration  into  the 
State.  —  The  farmers  in  Ohio  were  not  purchasing  lands  as 
they  had  formerly  done.  This  was  attested  by  the  records  of 
the  land  offices  and  the  great  number  of  public  sales  without 
bidders.17  Although  the  credit  system  of  selling  the  United 
States  public  lands  had  been  abolished  in  1820,  yet  the  price 
had  at  the  same  time  been  reduced  from  $2  to  $1.25  per  acre.18 
But  there  was  much  other  land  in  the  state  at  still  lower  prices. 
For  example,  in  the  Western  Reserve  land  sold  as  low  as  4Oc 
an  acre.19  And  in  1823  there  was  an  advertisement  running  in 
a  Chillicothe  paper  in  which  7000  acres  of  land  on  the  Big 
Miami  and  Scioto  rivers  were  offered  for  cpc  an  acre  cash,  or 
$1.00  an  acre  in  stock  of  the  Bank  of  Chillicothe.20 

Immigration  into  the  state,  which  had  been  unusually  large 
for  a  few  years  after  the  war  of  1812,  remained  comparatively 
at  a  standstill  during  the  period  from  1818  to  1825. 21  No  fig- 
ures are  available  as  to  the  increase  in  the  total  population  of 
the  state  during  that  period,  but  the  check  in  the  rate  of  growth 
may  be  seen  from  figures  in  the  state  auditor's  report  showing 
the  number  of  white  males  of  voting  age  in  the  state  at  four- 
year  intervals.  In  1815  the  number  of  white  males  over  21 
years  of  age  in  the  state  was  64,814.  From  1815  to  1819  the 
number  increased  by  33,966,  a  gain  of  52.5%.  During  the  next 
four  years  the  increase  was  25,855,  a  falling  off  of  nearly  one- 


15  A  Short  History  of  Paper  Money  and  Banking  —  Gouge,  p.  136. 
A  History  of  American  Currency  —  Sumner,  p.  84. 
19  Ibid. 

"Liberty  Hall  and  Cincinnati  Gazette,  May  18,  1824. 
"The  Public  Domain  —  Thomas  Donaldson,  pp.  201  and  205. 
19  Ibid.,  p.  202. 

39  The  Supporter  and  Scioto  Gazette,  Nov.  29,  and  Dec.  13,  1823. 
21  History  of  Ohio  —  Atwater,  p.  349. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    105 

fourth.  While  from  1823  to  1827  the  increase  was  only  21,110, 
or  more  than  a  third  less  than  the  increase  from  1815  to  iSiQ.22 

Bad  Banking  and  Depreciation  of  Ohio  Bank  Notes  not 
the  chief  Cause  of  the  Depression.  —  The  continuance  of  the 
depression  in  Ohio  so  long  after  the  crisis  of  1818-19,  however, 
was  not  altogether  due  to  defective  banking  nor  to  a  depreciated 
currency.  In  fact,  most  of  the  banks  had  failed  or  disappeared. 
By  1826  there  remained  only  10  banks  whose  notes  were  cur- 
rent throughout  the  state.23  And,  while  the  notes  of  the  Ohio 
banks  had  all  this  time  been  at  a  discount,  yet  the  amount  of 
their  depreciation  had  gradually  decreased.  Thus  Ohio  banks 
notes  quoted  from  15  to  25  discount  in  Philadelphia  in  July 
1820,  were  5  to  10  discount  in  July  1821,  6  discount  in  July  1822 
and  1823,  5  to  6  discount  in  April  1824  and  1825,  and  only  5 
discount  in  April  i826.24 

A  Cincinnati  paper  in  1824,  commenting  on  the  depression 
of  prices  and  business  that  for  several  years  previous  had  pre- 
vailed in  the  state,  exclaims,  "Is  it  to  be  attributed  to  the  opera- 
tion of  banks  and  depreciated  currency?  No!  for  our  banks,  so 
long  blamed  as  the  cause  of  all  our  evils,  are  swept  away,  and 
our  currency  is  sound  and  healthful."25  The  paper  then  points 
out  that  great  trouble  with  Ohio  at  that  time  was  the  want  of  a 
market  for  the  surplus  produce  of  the  state.  And  this  diagnosis 
of  the  case  was  undoubtedly  correct. 

22  Number  of  white  males  over  21  years  of  age  in  Ohio  at  different 
periods : 

Year.  Number.  Year.  Number. 

1807  31,308  1827  145,745 

1815  64,814  1831   176,300* 

1819   98,780  1835  235,225 

1823  124,635 

*  Estimated.     Figures  from  several  counties  missing. 
Auditor  of  State's  Report,  Dec.  31,   1855.     Ohio   Exec.   Doc.,   1855. 
(Part  II,  No.  1.) 

23  Ohio  Gazetteer  for  1826  —  Kilbourn,  p.  231. 

24  See  Appendix,  p.  260. 

28  Liberty  Hall  and  Cincinnati  Gazette,  May  18,  1824. 
See  also  the  issue  of  this  paper  for  Jan.  24,  1823. 
For  further  testimony  that  the  currency  of  the  state  was  sound  at 
that  time  see  The  Piqua  Gazette  of  March  5,  1825. 


1  v  Ohio  ArdL  «f  Hist.  Society 


the  Sin  pins  Products  of  the  State.  — 

The  state  was  stii  largely  wilderness,  and  its  half  a 

Ktti-  ,,,     ,       * 

__.._-    zjL-.r 


to  local  needs.     Of 
hot  fiufc,  and  of  mining  less.     The 

of  the  state  canied  on  sooie  tiade  widi  Canada  and  the  Atiantk 

-~:ift   :         i;     ::"  "t   li,  ^       7h:ri  :r.  tht   - :    :    t~    ir. :   ~:t:th- 

-TT-  :i~    ::  thi  r.i:t     i:  i::t55  :;    v.t    IT.::   ir.i  the  Mifs- 

issippi  rivers  to  the  ftaltmk^  market  of  New  Orleans.     This 

~r.±    - :  .'.~  -~    ~.:..'       ..'.:    ri* 

-  -     ~.  -'-  ~-         ~  -~     "   . .~ ..     .    ~      '..'-..     ~-  '~  ~:  ~     1 ."".  t" 

~   -".ir  'r.ct..       . ..rir."   *      iiir.-.'r.   it 
-.,_^_ .      .     ._  _-_^    j,_ 

te.     He  fiemMaril^  had  to  dnp  his 

&**  or  sefl  it  at  a  sacrifice,  often  at  a  price 

,.     ._-__. _-   .-_.   __  . 

-      -   r       tic.tt  Lr.  _    :.-3.:  iT- 

of  the  ^iate  was  aLmiiol  deprived  of  a  nmkrt. 
of  the  state  had  been  settled  by  people  from 

:  t'ti  :".itr  r:i:-f     .-.iih  rt:t::r.  hi:  it- 

roo^bt  by  its  first  settlers.     Lack  of 
the  difffrcai  parts  of  the  state  front  being' 
iHy,  or 

itrt'.f      ~:---      ir  :-t 

"       *  *  —  *  "  "-~^. 

-  -   -  _-_  ^  _  _  -  _  -  J_   -         -^----J^_u        *  •"  A. 

too  great.    Tocrc 

yet  thoogfat  of.    The  products  of  die  soil  were  balky 
cosily  to  transport.    So  the  horde 

-.it  :-t:;.:t 

tibey  wished  to  import  they  had  to  deprive 
of,  all  because  the  mAts  of  transportation  were  ex- 


Fiifiiiliiii  SKA**    m    182*.  — Abstract  of  ttA    Ceasm,    fu 
75M»»i«  Iflgi— TW  PJJM  Gaattte.  Mareh 


Banking  and  Currency  in  Ohio  Before  the  Ctrff  War.    107 

Opening  of  the  Erie  Canal  and  Beginning  of  the  Ohio 
Canals  in  1825.  —  Two  events  in  1825  aided  greatly  to  chang- 
ing these  conditions  and  starting  Ohio  well  on  the  way  to  pros- 
perity. One  of  these  was  the  opening  of  the  Erie  Canal  through 
New  York  between  Lake  Erie  and  the  Hudson  River,  giving 
Ohio  access  at  once  to  the  markets  of  Xew  York  City  and  Ac 
Atlantic  coast  region;  the  other  was  the  beginning  of  Ohio's 
own  canal  system,  connecting  Lake  Erie  with  the  Ohio  River. 

The  "Act  to  provide  for  the  Internal  Improvement  of  Ac 
State  of  Ohio  by  Navigable  Canals"  was  passed  by  the  kgisla- 
a  vote  of  92  to  15  on  February  4,  1825.*'  This  pro- 
vided for  two  canal?,  one  308  miles  long,  passing  through  the 
northeastern,  central,  and  sooth  central  portions  of  die  state 
and  connecting  Cleveland  on  Lake  Erie  at  die  month  of  die 

ahoga  with  Portsmouth  on  the  Ohio  at  die  month  of  die 

to.  and  the  other  66  miles  long,  traversing  the  southwestern 
part  of  the  state  and  connecting  Dayton  on  the  Great  Miami 
River  with  Cincinnati  on  the  Ohio.2*  By  Jury  of  die  same  year 
the  work  of  construction  had  begun  on  both  these  canals.3*  and 
two  years  later  navigation  began  on  both  of  them.3* 

Industrial  and  Social  Awakening  in  the  State.  —  The 
canals  authorized  by  this  act  were  not  completed,  however,  for 
half  a  dozen  years  more.*1  These  canals  ultimately,  by  pro- 


'Ohio  Senate  Journal.  1325,  p.  2»4.  House  Journal,  1835,  PL  3KL 
Laws  of  Ohio,  VoL  XXIII  (1825).  p.  50. 

~  The  latter  canal  was  ultimately  extended  fir  on  Davton  to  Toledo* 
thus  making  two  canals  across  the  state  connecting  Lake  Erie  with  tike 
Ohio  Rr. 

*  Fourth  Report  of  die  Ohio  Canal  Commission,  Dec.  l«t  1835. 

"Governor  Trimble's  Message  of  Dec.  4.  1837. 

:h  Annual  Report  of  die  Canal  Commission.  Jan.  25,  18381 

c  Eleventh  Annual  Report  of  the  Canal  CMM^A^  Jan.  22,  1899L 
Later  extensions  and  branches  increased  the  state's  canal  system  until 
when  completed  in  1  $47  it  consisted  of  over  800  miles  of  canals  and  slack- 
water  navigation.  To  feed  these  canals  the  state  also  amsUaclcd  five 
reservoirs  whose  areas  totaled  over  32400  acres.  The  total  cost  of  the 
canals  and  reservoirs  was  over  $15,000,000>  winch  was  paid  fihaiilrj  by 
state  loans. 

Tenth  Annual  Report  Board  of  Pttbfic  Works,  Jan.  5,  1847.  Report 
of  Board  of  Public  Works.  Dec.  22,  1908.  pp.  8  anc 


108  Ohio  Arch,  and  Hist.  Society  Publications. 

viding  means  of  transportation  and  communication,  added  new 
markets  and  new  avenues  of  trade,  raised  the  prices  of  home 
products,  and  rendered  cheaper  the  foreign  articles,  thus  saving 
to  the  people  of  the  state  both  on  their  exports  and  their  im- 
ports.32 The  large  expenditures  for  construction  of  the  canals, 
too,  at  once  encouraged  enterprise  and  industry  and  invited  im- 
migration and  capital.  The  following  quotation  from  the  Cleve- 
land Herald  in  July  1826  illustrates  this  point:  ''Upwards  of 
2000  laborers  and  about  3000  teams  are  constantly  employed  on 
the  line  between  this  place  and  Kendall,  which  is  now  under 
contract;  and  work  to  the  amount  of  between  40  and  $50,000 
at  contract  prices,  is  performed  monthly."33  Other  portions  of 
the  work  showed  similar  conditions.  Both  wages  and  the  price 
of  provisions  began  to  rise  along  the  canals. 

At  first,  beside  board,  the  contractors  provided  their  work- 
men with  whiskey.  ''The  whiskey  consumed  by  the  hands  em- 
ployed on  a  single  job  near  the  Licking  Summit  on  the  Ohio  and 
Erie  Canal  cost  the  contractor  the  sum  of  $3,000.  In  other 
cases  the  whiskey  consumed  by  the  laborers  cost  more  than  the 
bread  or  meat."34  The  practice  of  supplying  whiskey  to  their 
men  was  later  discontinued  by  the  contractors,  but  the  price  of 
potatoes,  wheat,  corn,  whiskey,  etc.,  continued  to  advance  along 
the  canals.35 

The  demand  for  labor  increased  immigration.  New  towns 
and  villages  sprang  up  along  the  canals,  and  old  ones  took  on 
new  life.  The  city  of  Akron  owes  its  origin  to  the  settlement 
there  in  1825  of  Irish  workmen  engaged  on  the  canal.  Cleveland 
was  only  a  village  of  400  inhabitants  in  1820.  The  opening  of 
the  Ohio  and  Erie  Canals  made  it  a  city.  Cincinnati's  popula- 
tion in  1820  was  2,6o2.36  In  1829  it  was  estimated  at  24,000. 


32  For  a  discussion  of  the  benefits  of  the  Ohio  Canals  see  History 
of  Ohio  Canals  by  Huntington  &  McClelland,  Chapter  XL 

33  Western  Times   (Portsmouth,  O.),  July  6,  1826. 
34 The  Chronicle   (Cincinnati,  O.),  Feb.  28,  1829. 

35  See  Temporary  Advertiser  (Portsmouth),  Feb.  24,  1826.  Western 
Times  (Portsmouth),  April  25,  1829.  Western  Tiller  (Cincinnati),  Aug. 
25,  1826.  Hamilton  Intelligencer,  Dec.  2,  1828,  and  May  12,  1829.  Western 
Aegis  (Georgetown),  Nov.  25,  1828. 

38  Report  of  Ohio  Commissioner  of  Statistics,  1857-9. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    109 

"The  settlement  and  improvement  of  this  city  for  the  last  5 
years,"  says  an  Ohio  paper,  "has  been  rapid  almost  beyond  ex- 
ample."37 The  population  of  the  whole  state  increased  from 
581,434  in  1820  to  937,903  in  i83O,38  a  gain  of  61.5%.  During 
the  same  period  the  population  of  the  United  States  increased 
only  33.5%.  But  the  gain  in  Ohio  was  much  more  rapid  during 
the  later  years  of  the  decade  than  during  the  earlier  years.  The 
number  of  white  males  of  voting  age  in  the  state  increased  46,- 
965,  or  47.5%,  from  1819  to  1827.  During  the  next  eight  years 
gain  was  nearly  twice  as  much,  being  89,480  or  an  increase  of 
61.4%  in  the  total  number,  the  percentage  rate  showing  a  big 
increase  notwithstanding  the  larger  base.39  The  increasing  pop- 
ulation, together  with  the  stimulus  to  industry  from  the  in- 
creased prices  of  produce,  caused  a  demand  for  land,  and  it 
rose  in  value.40  During  1829  the  sales  of  public  lands  in  O<hio 
amounted  to  more  than  1,465,000  acres,  a  greater  quantity  than 
was  sold  in  any  other  state  except  Indiana  and  Illinois,  and 
greater  than  had  been  sold  in  Ohio  any  previous  year  since 
1822." 

The  credit  for  the  increased  rate  of  growth,  as  well  as  for 
the  improvement  in  prices  and  business  conditions  generally  is 
due  far  more  to  the  opening  of  the  Erie  and  Ohio'  canals  than 
to  any  change  in  tariff,  currency,  or  banking  conditions,  although 
it  was  said  about  the  time  that  the  Ohio  canals  first  opened  that 
no  section  of  the  Union  then  had  a  better  circulating  medium 
than  Kentucky,  Ohio,  Indiana,  Illinois,  and  Missouri.42 

Dissatisfaction  with  the  Operation  of  the  Bonus  Law.  — • 
An  important  change  in  the  banking  laws  of  Ohio  had  been  made 
in  1825  when  a  tax  on  dividends  was  substituted  for  the  bonus 
scheme  provided  for  in  the  law  of  February  23,  i8i6.43  It  will 


87  Ohio    State    Bulletin,    Aug.    12,    1829.      See    also    The    Chronicle 
(Cincinnati,  O.),  June  21,  1828. 

38  Abstract  of  12th  Census,  p.  33. 

39  See  note  on  page  105. 

40  Western  Times   (Portsmouth,  O.),  May  2,  1829. 

41  Ohio  State  Gazette  and  Delaware  County  Journal,  Jan.  20,  1831. 
"Niles'  Weekly  Register,  Vol.  XXXII,  p.  37.     (March  17,  1827). 
43  See  Chapter  II,  p.  45. 


110  Ohio  Arch,  and  Hist.  Society  Publications. 

be  recalled  that  each  of  the  banks  incorporated  under  that  law 
was,  in  lieu  of  other  state  taxation,  to  set  off  annually  such  a 
part  of  its  profits  as  would  at  the  expiration  of  its  charter  pro- 
duce a  sum  sufficient  to  pay  for  one  twenty-fifth  of  its  capital 
stock  which  was  to  be  property  of  the  state. 

This  scheme  apparently  did  not  prove  very  satisfactory 
either  to  the  banks  or  to  the  state.  In  1818  the  banks  peti- 
tioned the  legislature  to  repeal  the  bonus  law;  but  a  committee 
of  the  legislature  reported  that  it  was  not  expedient  to  exempt 
the  banks  from  the  payment  of  the  bonus.  So  nothing  was  done 
then  towards  repealing  the  law,  although  Governor  Brown  in 
his  message  of  December  16,  1818,  suggested  substituting  for  the 
bonus  a  tax  on  the  real  estate  and  dividends  of  the  banks.44 

All  of  the  banks  incorporated  in  Ohio  before  February  23, 
1816,  had  accepted  charters  under  the  bonus  law  by  September 
i,  1816,  except  the  Miami  Exporting  Company.  Of  the  banks 
incorporated  later  under  that  law,  however,  some  did  not  ac- 
cept their  charters  until  late  in  i8i8.45  These  up  to  the  time  of 
accepting  their  charters,  were  liable  for  taxes  under  the  law  of 
February  8,  1815,  which  had  imposed  a  tax  of  4%  on  the  annual 
dividends  of  the  banks,  and  had  provided  that  if  any  bank 
should  fail  to  report  its  dividends  to  the  auditor  of  state  he 
should  levy  a  tax  of  i%  on  its  nominal  capital,  to  be  increased 
by  a  penalty  of  4%  in  case  of  delay.46  The  Miami  Exporting 
Company,  which  had  refused  to  accept  a  charter  under  the 
bonus  law,  was  also  taxable  under  the  law  of  1815. 

On  January  5,  1819  the  state  auditor  made  a  report  to  the 
legislature  on  the  stock  set  off  to  the  state  by  banks  and  also  the 
taxes  paid  into  the  state  treasury  by  banks.  This  report  shows 
that  up  to  that  time  the  total  stock  set  off  to  the  state  under  the 
bonus  law  amounted  to  $79,930.27;  that  the  amount  set  off  which 
accrued  prior  to  the  acceptance  of  charters  under  the  law  was 
$6,251.51;  and  that  the  amount  set  apart  to  the  state  by  the 
Miami  Exporting  Company  was  $5,i4O.98.47  Thus  the  total 


44  See  Chapter  III,  p.  65. 

45  See  p.  49. 

46  See  Chapter  I,  p.  38.    Also  Laws  of  Ohio,  Vol.  XIII  (1815),  p.  152. 

47  Ohio  Senate  Journal,  1819,  p.  207. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    Ill 

amount  of  taxes  paid  by  banks  under  that  law  up  to  January 
1819  was  only  $11,392.49;  while  the  amount  of  stock  set  off  to 
the  state  was  only  $79,930.27.  Two  years  later  a  legislative 
committee  was  appointed  to  examine  and  report  regarding  the 
amount  of  the  bonus  set  apart  by  the  different  banks.  Its  report, 
made  December  28,  1820,  showed  that  the  total  amount  of  the 
bonus  set  off  to  the  state  was  only  $84,385.30,  of  which  but  $37,- 
023.40  was  in  banks  then  paying  specie.48  This  did  not  indicate 
that  the  bonus  would  ever  yield  much  revenue  to  the  state. 

Difficulty  in  Collecting  the  State's  Claims  against  Banks, 

-  Many  of  the  banks  had  failed  and  most  of  the  others  were 
unable  or  refused  to  pay  specie  for  their  notes.  Consequently  a 
good  deal  of  worthless  bank  paper  had  found  its  way  into  the 
state  treasury.  A  committee  of  the  legislature  had  reported  De- 
cember 20,  1820,  that  there  remained  in  the  state  treasury  $33,- 
933.61  in  uncurrent  bank  paper,  of  which  the  probability  of  re- 
demption was  very  distant.  As  none  of  the  banks,  except  the 
Miami  Exporting  Company,  seemed  disposed  to  do  justice  to  the 
state,  the  committee  had  recommended  that  if  the  treasurer  could 
not  collect,  he  should  either  get  real  estate  security  or  sue.49 

In  many  cases  the  state  did  sue,  frequently  getting  judg- 
ments, however,  which  were  more  or  less  worthless.  Under  a 
joint  resolution  of  the  legislature  at  the  session  of  1824  commis- 
sioners were  appointed  to  look  after  the  claims  of  the  state 
against  banking  corporations.  Their  report  was  given  on  De- 
cember 14,  i8'24.50 

They  had  sold  the  claims  of  the  state  against  the  Miami 
Exporting  Company  for  33^  cents  on  the  dollar,  receiving  paper 
of  that  bank  at  par.  This  paper  was  sold  at  public  auction  for 


48  Ohio  House  Journal,  1821,  p.  195.     The  auditor's  report  of  Dec.  5, 
1821,  under  receipts  for  the  year  1821,  showed  that  the  amount  set  aside  by 
the   Miami   Exporting   Company,   under   the   act   to   raise   revenue   from 
banks,  etc.,  was  $691.81.  —  Liberty  Hall  and   Cincinnati  Gazette,  Jan.  2, 
1822. 

49  Ohio  House  Journal,  1821,  p.  160. 

50  Ohio  Senate  Journal,  1825,  p.  57. 


112  Ohio  Arch,  and  Hist.  Society  Publications. 


cents  on  the  dollar  and  realized  the  sum  of  $4,345.  5O.51 
The  claims  against  the  German  Bank  of  Wooster,  amounting  to 
$827,  the  commissioners  considered  a  total  loss.52  The  claim 
against  the  Lebanon  bank  by  judgment  was  $9,941.  This  in- 
stitution was  solvent  and  able  to  pay,  but  such  was  the  diffi- 
culty of  collecting  that  its  paper  commanded  only  30  or  35  cents 
on  the  dollar.  The  same  observations  were  made  as  to  the 
Urbana  Banking  Company,  against  which  the  state's  claims  were 
$4,058.  This  concern,  the  commissioners  suggested,  it  was  de- 
sirable to  close  as  soon  as  possible. 

Such  difficulties  as  these  in  collecting  calims  against  the 
banks,  together  with  the  absolute  failure  of  many  of  the  banks 
organized  under  the  bonus  law,  made  it  apparent  that  the  state 
could  hope  for  but  little  revenue  from  the  bonus. 

Tax  on  Bank  Dividends  substituted  for  the  Bonus.  —  On 
December  17,  1824,  three  days  after  the  above  report  was  made 
to  the  legislature,  that  body  received  a  report  of  the  state  auditor 
on  the  banks  chartered  under  the  act  of  February  23,  1816.  This 
report  announced  that  it  was  extremely  doubtful  whether  the 
state  would  ever  derive  any  considerable  advantage  from  the 
bonus  set  apart  to  the  state  by  the  banks  incorporated  under  that 
act,  since  their  condition  was  bad  and  their  capital  stock  likely 
to  be  entirely  exhausted.  The  auditor  recommended  that  a 
committee  'of  the  legislature  be  appointed  to  consider  the  mat- 
ter. This  advice  was  acepted  and  the  report  was  referred  to  a 
committee.53 

The  legislature  evidently  soon  became  convinced  of  the  cor- 
rectness of  the  auditor's  conclusion.  At  any  rate,  on  February 
5,  1825,  an  act  was  passed  amending  the  act  of  February  23, 


61  The  paper  was  to  be  sold  to  the  highest  cash  bidder  on  Aug.  24, 

1824.  —  Liberty  Hall  and   Cincinnati   Gazette,   Aug.   6,   1824.     The  judg- 
ment against  the  Miami  Exporting  Company  was  $9,570.14,  which  with 
interest,  dividends,  etc.,  amounted  to  $11,511.35.  —  Ohio   Senate  Journal, 

1825,  p.  57. 

62  A  report  of  the  auditor,  treasurer  and  secretary  of  state  made  to 
the  legislature  Jan.  21,  1826,  states  that  a  judgment  against  the  German 
Bank  of  Wooster  for  $1,000  had  been  obtained  in  1821,  and  that  they 
could  get  $500  for  the  claim.  —  Ohio  Senate  Journal,  1826,  p.  246. 

03  Ohio  Senate  Journal,  1825,  p.  80. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    113 

1816,  known  as  the  bonus  law,  by  restoring  to  the  banks  in- 
corporated under  that  law  the  stock  set  aside  for  the  state,  and 
substituting  therefor  a  tax  on  the  dividends  of  the  banks.54  By 
the  act  of  February  5,  1825  each  of  these  banks  was  required  to 
pay  to  the  state  2%  on  all  dividends  made  by  it  previous  to  the 
passage  of  that  act,  and  4%  on  all  dividends  which  it  should 
make  thereafter,  until  otherwise  provided  by  law.  The  directors 
of  each  bank  were  required  to  notify  the  state  auditor  of  their 
acceptance  of  the  terms  of  the  act  and  of  their  compliance  there- 
with, and  to  furnish  him  with  a  statement  of  all  dividends 
declared  previous  to  its  passage. 

Under  the  bonus  law  each  bank  was  to  set  off  to  the  state 
one  share  in  each  twenty-five  of  its  stock.  On  this  bonus  the 
state  was  to  receive  dividends.  Theoretically,  therefore,  under 
the  bonus  law  the  state  would  have  received  4%  of  the  dividends 
of  the  bank  each  year;  and  in  addition  to  that  would  have  been 
entitled  to  one  twenty-fifth  of  all  the  bank's  net  assets  when  it 
came  to  settle  up  at  the  expiration  of  its  charter.  But,  since 
the  dividends  on  the  state  stock  were  to  remain  in  the  bank  and 
accumulate  until  the  state  should  own  one-sixth  of  the  capital 
stock,  naturally  the  scheme  failed,  as  a  source  of  revenue,  with 
the  failure  of  so  many  of  the  banks  concurring  in  it;  so  the  state 
willingly  exchanged  this  extraordinary  bonus  for  a  tax  of  from 
2-%  to  4%  on  the  dividends  of  the  banks. 

After  this  change  in  the  tax  law  in  1825  no  change  was 
made  in  the  banking  laws  of  Ohio  until  i83i.55 

Lack  of  Banking  Statistics  from  1820  to  1830.  —  Statistics 
regarding  banks  in  Ohio  during  the  decade  from  1820  to  1830 
are  very  meagre.  The  number  of  chartered  banks  operating  in 
the  state  as  the  close  of  the  decade,  however,  was  much  smaller 
than  at  its  beginning.  Early  in  1819  a  committee  of  the  legisla- 
ture had  reported  25  banks  in  operation.56  On  February  24, 
1820,  the  committee  on  banks,  to  whom  had  been  referred  the 


54  Revised  Statutes  of  Ohio  — Chase,  p.  1463.     History  of  Banking  — 
Knox.  p.  671. 

65  Bankers'  Magazine,  Vol.  IX,  p.  3,  and  Vol.  XI,  p.  164. 
56  See  Chapter  III,  p.  75. 

8 


114  Ohio  Arch,  and  Hist.  Society  Publications. 

governor's  message  of  January  13  as  to  reports  of  banks,  re- 
ported to  the  legislature  that  18  banks  had  answered  the  com- 
munication of  the  governor  as  to  their  condition:  3  by  letter 
only,  apparently  confidential,  and  giving  no  statement  of  their 
condition ;  2  others  making  confidential  reports  of  their  situation ; 
6  making  no  formal  report;  and  the  remainder  giving  but  a 
short  report  of  their  situation  and  only  two  under  oath  of  the 
cashier.  The  committee  declined  to  make  an  abstract  of  the 
reports  because  it  considered  them  not  intended  for  the  legis- 
lature.57 By  1826  these  18  banks  had  dwindled  in  number  until 
there  remained  but  10  whose  notes  were  current  throughout 
the  state.58 

Need  of  Banking  Capital  in  Cincinnati  in  1826.  —  Cincin- 
nati, the  largest  town  and  most  important  trade  center,  had 
no  incorporated  bank  in  1826  except  the  branch  of  the  United 
States  Bank.59  The  need  of  banking  capital  there  at  that  time 
is  indicated  in  the  following  quotation  from  a  small  work  pub- 
lished in  1826 :60 

"Cincinnati  for  several  years  has  been  deficient  in  the  amount 
of  its  disposable  capital;  a  nominal  superfluity  of  it  existed  dur- 
ing the  prosperity  of  the  local  banks;  after  their  destruction, 
paper  currency  was  almost  withdrawn  from  circulation  and 
much  of  the  metallic  currency  applied  to  the  payments  due  the 
United  States  Bank  and  the  eastern  merchants.  From  this  con- 
dition of  things  the  city  has  been  gradually  recovering,  but  its 
citizens  are  not  yet  large  capitalists.  Although  engaged  in 
profitable  business  most  of  them  have  not  the  means  of  extend- 
ing it  to  a  scale  proportioned  to  their  enterprise  and  the  re- 
sources of  the  place.  Money  is  consequently  in  great  demand, 


67  Ohio  House  Journal,  1820,  p.  414. 

68  The  Ohio  Gazetteer  for  1826  —  Kilbourn,  p.  231.     These  were  the 
Western   Reserve   Bank  of  Warren,  the   Bank  of   Steubenville  and  the 
Farmers'  and  Mechanics'  Bank  at  Steubenville,  the  Bank  of  Mt.  Pleasant, 
the  Bank  of  St.  Clairsville,  the  Bank  of  Marietta,  the  Lancaster  Ohio 
Bank,  the  Franklin  Bank  of  Columbus,  the  Bank  of  Chillicothe,  and  the 
Commercial  Bank  of  Scioto  at  Portsmouth.    To  these  may  be  added  the 
Branch  of  the  U.  S.  Bank  at  Cincinnati. 

59  Bankers'  Magazine,  Vol.  XI,  p.  171. 

60  Cincinnati  in  1826  —  Charles  Cist. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    115 

and  a  high  price  is  willingly  paid  for  its  use.  For  small  sums 
36%  per  annum  is  frequently  given,  and  for  large  ones  from  10 
to  20%  is  common." 

State  Loans  and  Public  Works  increase  the  Money 
Supply.  —  During  1826  and  1827  the  effort  to  establish  another 
incorporated  bank  in  Cincinnati  was  discussed  generally,  but 
none  materialized.61  Exepnditures  on  the  canals  of  the  state, 
however,  and  other  causes,  among  which  was  a  more  plentiful 
supply  of  money  in  the  country  generally  in  i827,62  contributed 
to  improve  financial  matters  in  Cincinnati  as  well  as  in  the 
remainder  of  the  state.  During  the  years  from  1825  to  1828  the 
state  issued  its  stocks  of  the  par  value  of  $3,800,000  to  defray 
the  costs  of  canal  construction.  With  the  exception  of  the 
$400,000  $%  loan  in  1825,  which  was  placed  at  a  discount  of 
2^%,  these  stocks  all  bore  6%  interest  and  were  issued  at  a 
premium.  The  net  premiums  for  the  four  years  mentioned 
amounted  to  $I24,895.63  The  proceeds  of  these  bans  being  ex- 
pended in  the  state,  increased  of  course  the  amount  of  money 
in  the  state,  and  aided  materially  in  improving  its  industrial  and 
financial  conditions.  Niles  Register  of  March  17,  1827,  says, 
"At  present  there  is  no  section  of  the  Union  that  has  a  better  cir- 
culating medium  than  Kentucky,  Ohio,  Indiana,  Illinois,  and 
Missouri — vexed  as  they  have  been  with  manufactories  of  paper 
money."64 

Project  of  Establishing  a  State  Bank  discussed.  —  About 
this  time  the  project  of  a  state  bank  was  discussed  considerably  in 
Ohio.  In  compliance  with  a  resolution  of  the  state  senate  ask- 
ing information  on  the  subject,  the  auditor  of  state  in  his  re- 
port of  January  14,  1829  dealt  at  some  length  with  the  question. 
He  stated  that  some  states  had  succeeded  and  others  had  failed 
with  state  banks,  but  that  the  successful  state  banks  had  had  as 


61  Liberty  Hall  and  Cincinnati  Gazette,  Sept.  15,  1826.    Daily  Gazette 
(Cincinnati),  Nov.  19,  1827. 

62  A  History  of  American  Currency  —  Sumner,  p.  87. 

63  History  of   the    Ohio   Canals  —  Huntington   &   McClelland,   p.   69. 
Other  6%  loans  followed,  the  total  par  value  of  the  loans  from  1825  to 
1839  being  $9,446,123,  on  which  the  premiums  netted  $581,013.25.  — Ibid. 

84  Niles'  Register,  Vol.  XXXII,  p.  37. 


116  Ohio  Arch,  and  Hist.  Society  Publications. 

nearly  as  practicable  the  character  of  private  institutions.  The 
auditor  declined,  however,  to  advise  as  to  the  policy  of  establish- 
ing a  state  bank,  giving  as  his  reason  the  fact  that  he  had  had 
no  particular  supervision  of  banks  such  as  to  give  an  intimate 
acquaintance  with  them.65  A  little  later,  however,  a  legislative 
committee,  appointed  to  prepare  information  on  the  subject,  re- 
ported in  favor  of  a  state  bank,  to  be  located  at  Cincinnati  and 
its  capital  stock  to  be  held  by  the  state  and  individuals  com- 
bined. The  committee  expressed  the  belief  that  such  a  bank 
would  be  able  to  keep  its  paper  at  par  with  gold  and  silver ;  that 
it  would  effect  a  lower  rate  of  interest,  thus  enabling  borrowers 
to  obtain  loans  on  cheaper  and  easier  terms;  and  that  the  in- 
crease of  capital  which  such  a  bank  would  bring  about  would 
be  accompanied  by  a  corresponding  promotion  and  extension  of 
agriculture,  commerce,  and  manufacture.66 

Two  new  Banks  authorized  by  the  Legislature.  —  While 
this  recommendation  for  a  state  bank  was  not  carried  out,  the 
legislature  did  a  few  days  later  authorize  the  incorporation  of 
two  more  banks  in  the  state.  On  February  10,  1829,  a  charter 
was  granted  to  the  Bank  of  Geauga  at  Painesville  with  a  capital 
stock  of  $ioo,ooo,67  and  the  next  day,  February  n,  1829,  the 
Commercial  Bank  of  Cincinnati  was  authorized  with  a  capital 
stock  of  $500,000,  of  which  $100,000  had  to  be  paid  in  gold  and 
silver  before  the  bank  could  begin  business.68  The  capital 
stock  of  the  latter  remained  unsubscribed  for  two  years  after- 
wards, however,  in  consequence  of  the  demand  for  capital  to  be 
used  in  more  profitable  pursuits  than  banking.69  In  1829  land 
was  increasing  in  value  in  the  state  and  there  was  comparatively 
no  scarcity  of  money.70  The  expenditure  of  thousands  of  dol- 
lars on  internal  improvements,  and  the  resultant  facilities  for 
transportation  were  already  bearing  fruit  in  better  industrial 


95  Ohio  Senate  Journal,  1829,  p.  219. 

M  The  Miami  Herald  and  Dayton  Republican,  Feb.  3,  1829. 
"Laws  of  Ohio,  Vol.  XXVII   (1829),  p.  27. 

88  Bankers'  Magazine,  Vol.  XI,  p.  165.    Laws  of  Ohio,  Vol.  XXVII 
(1829),  p.  42. 

69  Dayton  Journal  &  Adviser,  April  19,  1831. 

70  Western  Times  (Portsmouth,  O.),  May  2,  1829. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    117 

conditions.  In  his  message  of  December  9,  1829,  Gov.  Trimble 
states  that  the  general  concerns  of  the  state  were  never  in  a  more 
prosperous  condition.71 

The  number  of  banks  in  the  state  at  that  time  was  much 
smaller  than  it  had  been  in  the  early  years  of  the  decade,  but 
on  the  other  hand  their  condition  was  much  better  and  their 
notes  far  less  depreciated  and  fluctuating.  The  heterogeneous 
character  of  their  paper  in  the  early  twenties  may  readily  be 
seen  from  the  following  table  taken  from  a  Cincinnati  paper  of 

I822.72 

DEPRECIATION    OF    OHIO    BANK    NOTES    IN    FEBRUARY    1 822. 

Bank  of  Steubenville par. 

Farmers'  and  Mechanics'  Bank  of  Steubenville par. 

Mt.    Pleasant    par. 

Western  Reserve 2 

St.    Clairsville    1 

Bank  of   Chillicothe ^ 

Lancaster  Bank  1 

Marietta    2 

Columbus    2 

West  Union   40 

Zanesville    Canal 50 

Muskingum  Bank  12^ 

Portsmouth     15 

Dayton    1^  to    2 

Hamilton    31      to  35 

Miami  Exporting  Co Q2l/2  to  65 

Bank  of  Cincinnati 70 

Canton    25 

Smithfield    75 

New  Salem  80 

Cleveland 75 

New  Lisbon  50 

Xenia    4 

F.  &  M.  Bank,  Chillicothe 75 

Urbana    75 

Lebanon    55 


T1Niles'  Register,  Vol.  XXXVII   (Jan.  2,  1830),  p.  290. 
73  Liberty  Hall  and  Cincinnati  Gazette,  Feb.  2,  1822. 


118  Ohio  Arch,  and  Hist.  Society  Publications. 

With  the  preceding  may  be  compared  the  following  table 
taken  from  another  Cincinnati  paper  of  i828.73 

DI COUNT   ON   OHIO    BANK    NOTES   IN    JANUARY,      1828. 

Bank  of  Chillicothe 1 

Bank  of  Lancaster 1 

Bank  of   Columbus 1 

Bank  of  Steubenville 1^2 

F.  &  M.  Bank  of  Steubenville tf> 

Bank  of  Mt.  Pleasant 1^ 

Bank  of   Marietta \l/2 

Western    Reserve    l*/2 

Portsmouth    1^ 

St.   Clairsville    1*4 

The  decrease  in  the  number  of  banks  whose  notes  are 
quoted  is  very  apparent,  but  the  increase  in  the  uniformity  of  the 
quotations  is  just  as  striking.  The  worst  of  the  banks  named 
in  the  first  table  had  passed  away.  The  stronger  remained. 

Albert  Gallatin,  writing  in  1831,  enumerates  20  Ohio  banks 
which  had  failed  or  discontinued  business  since  Jan.  i.,  1811. 
The  capital  stock  of  two  of  the  banks  in  the  list  is  not  given, 
that  of  the  other  18  amounts  to  $1,911,179.  The  list  follows:74 

OHIO    BANKS    WHICH    FAILED    BETWEEN    l8ll    AND    183!. 

Name  of  Bank.  Capital. 

Miami  Exporting  Company,  Cincinnati $468,966 

Columbiana  Bank  of  New  Lisbon 50,000 

Granville   Alexandrian    Society 12,002 

Farmers'  Bank  of  New  Salem 57,000 

German  Bank  of  Wooster 25,000 

Bank  of  Muskingum 97,000 

Farmers'  &  Mechanics'  Bank  of  Cincinnati 184,776 

Bank   of   Cincinnati 216,430 

Dayton  Manufacturing  Company 61,622 

Lebanon  Miami  Banking  Company 86,491 

Urbana  Banking  Company * 49,685 


"Cincinnati  Daily  Gazette,  Jan.  8,  1828. 

T4  Considerations  on  the  Currency  and  Banking  System  of  the  United 
States  —  Gallatin,  p.  105.  Report  of  the  U.  S.  Comptroller  of  the  Cur- 
rency, 1896,  Vol.  1,  p.  48. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    119 

Farmers'  &  Mechanics'  Mfg.  Bank  of  Chillicothe 99,575 

Bank  of  Hamilton 22,707 

Zanesville  Canal  &  Manufacturing  Company 79,125 

Bank  of  West  Union 100,000 

Commercial  Bank  of  Lake  Erie 100,000 

Bank  of  Steubenville 100,000 

Muskingum  Bank  of  Zanesville 100,000 

Jefferson  County  Bank 

Bank   of   Xenia.. 


Total  (18  banks)78 $1,911,179 

Causes  of  Failure  of  Majority  of  Ohio  Banks.  —  It  will  be 
seen  that  this  list  includes  many  of  the  banks  whose  notes  were 
greatly  depreciated  in  1822  as  shown  by  the  preceding  table.  The 
causes  of  their  failure  were  various.  Some  of  these  banks  had 
been  erected  on  stock  notes  alone,  the  directors  then  turning 
right  around  and  issuing  their  bank  bills  on  the  promise  of 
the  borrower  and  a  pledge  of  the  stock.76  Some  of  them  had 
been  got  up  for  the  purpose  of  borrowing  and  not  lending  money, 
and  defrauded  the  unsuspecting  with  their  depreciated  paper.  It 
is  not  surprising  that  such  banks  failed.  As  Governor  McArthur, 
speaking  of  the  insolvent  state  banks  of  that  period,  remarked, 
"To  insure  the  solvency  of  a  bank,  its  stockholders  should  be 
lenders  and  not  borrowers  of  its  money."77 

Not  all  were  dishonest,  however.  Many  of  the  defects 
and  many  of  the  failures  should  be  attributed  to  frontier  con- 
ditions. 78  The  following  quotation  from  a  Cincinnati  paper  of 
1826  is  interesting  as  bearing  directly  on  the  subject:  "The 
banking  operations  of  the  West  have,  in  too  many  cases,  been 
indiscreetly  and  injudiciously  conducted;  without  resorting  to 


76Gallatin  also  states  that  during  this  period  165  banks  failed  or 
discontinued  business  in  the  United  States,  of  which  number  129  had  a 
total  capital  of  $24,212,339. 

79  Ohio  House  Journal,  1835,  p.  208. 

"Political  address  to  electors  of  7th  Cong.  Dist.,  Sept.  11,  1832. 
—  Niles'  Register,  43  :89.,  Oct.  6,  1832. 

78  Similar  conditions  had  existed  in  New  England  earlier  in  the 
century,  the  practice  of  subscribing  to  capital  by  notes  having  been  almost 
universal  there  at  one  time.  —  History  of  American  Currency,  Sumner,. 
pp.  61  and  62. 


120  Ohio  Arch,  and  Hist.  Society  Publications. 

the  threadbare  charges  of  corruption  and  dishonesty,  sufficient 
causes  for  their  failure  can  be  found  in  their  too  great  success 
at  first,  in  a  want  of  correct  knowledge  of  the  details  of  the 
system,  and  in  the  peculiar  and  unusual  state  of  things  during 
the  war,  which  betrayed,  to  a  certain  extent,  even  the  most  ex- 
perienced and  veteran  institutions  in  our  country."79 

Benefits  derived  from  surviving  Banks.  —  There  remained 
ten  banks  whose  paper  was  current  in  the  state  in  1826  and  at 
a  discount  of  only  i  or  i^%  at  Cincinnati  in  1828,  as  shown  by 
the  foregoing  tables.  An  appreciation  of  them  is  given  by  the 
state  auditor,  Ralph  Osborn,  in  his  report  of  Jan.  14,  1829,  in 
which  he  speaks  of  the  benefits  received  from  the  banks  that  had 
survived.  By  them  the  active  capital  of  the  state  has  been  aug- 
mented, says  he,  and  facilities  afforded  for  the  transportation 
of  surplus  products  to  Atlantic  markets.  They  have  aided  in 
the  collection  of  the  revenue,  and  answered  the  demand  of  the 
land  proprietors  when  pressed  for  payment  by  the  general 
government.  "Indeed,"  he  goes  on,  "it  is  impossible  to  calculate 
the  benefits  all  classes  have  received  and  are  daily  receiving  from 
those  institutions.  Their  usefulness  will  not  cease  till  they 
multiply  so  as  to  prey  upon  each  other,  or  eagerness  for  gain 
leads  to  over-issues."80 

Statistics  of  Ohio  Banks  in  1830.  —  According  to  Gallatin 
there  were  in  January  1830  eleven  chartered  banks  still  in  opera- 
tion in  Ohio.  Their  names,  location,  and  capital  stock  are  given 
in  the  following  table,  which  shows  also  the  proportion  of  their 
capital  stock  to  the  population  of  the  counties  in  which  they  were 
located. 


"Liberty  Hall  and  Cincinnati  Gazette,  Sept.  15,  1826. 
80  Ohio  Senate  Journal,  1829,  p.  219. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    121 


DISTRIBUTION    OF   BANKS    AND    CAPITAL    IN    OHIO,    JANUARY,    1830. 


| 

1 

^ 

c 

rt 

M 

Capital 
Paid 

Stock_ 

in. 

Name   of   Bank.81 

County. 

c 

B 
o 

J2 

3 
I 

Number  of  '. 

a. 
"c3 

1 

1 

4 

'5, 

6 

i 

Belmont  Bank  of  St.   Clairs- 
ville          

Belmont     

28,627 

1 

$100,000 

$3.493 

Fairfield     

24,786 

1 

100  000 

4  035 

1*  741 

1 

100  000 

6  784 

Bank   of   Mt     Pleasant 

I 

r 

100  000 

22  489 

8  1 

100  000 

13  340 

Farmers'      and      Mechanics' 
Bank    of    Steubenville.  .. 
Bank  of  Chillicothe 

Ross       

24,068 

1 

100,000 
500  000 

20  774 

Commercial  Bank  of  Scioto, 

Scioto     

8,740 

1 

100  000 

11  442 

Stark 

26  588 

1 

100  000 

3  761 

Trumbull     

26  153 

1 

82  386 

3  150 

Bank   of   Marietta  

Washington    

11,731 

1 

72,000 

6  138 

Total   for  9  counties... 

187,923 

11 

$1,454,386 

$8.170 

Total     for     State     (73 
counties)         

937,903 

11 

1,454,386 

$1  551 

81  From  list  of  banks  and  capital  given  in  "Considerations  on  the  Currency  and 
Banking  System  of  the  United  States,"  by  Albert  Gallatin,  Philadelphia,   1831,  p.  100. 

82  Figures    for    population    from    Census    Bulletin,    No.    41,    12th    Census    of    the 
United  States,   p.  2. 

83  Obtained  by  dividing  the  amount  of  capital  in   each  county  by  the  population 
of  the  county. 

The  foregoing  table  shows  that  while  the  average  amount  of 
capital  per  inhabitant  was  $8.17  for  the  9  counties  in  which  the 
ii  chartered  banks  were  situated,  yet  for  the  state  as  a  whole 
the  average  banking  capital  was  only  $1.55.  Ten  years  before  it 
had  been  over  $4.  per  inhabitant. 

The  following  table  will  show,  so  far  as  returns  were  made 
by  the  banks,  the  number  of  chartered  banks  in  Ohio,  together 
with  their  total  capital  stock,  at  various  intervals  from  1805  to 
1830. 


122  Ohio  Arch,  and  Hist.  Society  Publications. 


NUMBER    AND   CAPITAL   OJ 

Year 
1805    

F   STATE    BANKS    IN    OHIO,    l£ 

No.  of 
Banks. 
1 

k>s  TO  1830. 

Capital  Stock. 

$200  OOO8* 

1811    

...    .                                      4 

895  OOO8* 

1812    

6 

1,200,000s* 

1814    

.                   8 

1  435  81  987 

1815    ...           

1285 

1  932  10887 

1816   

2188 

2,806,73787 

1817    

.    ...                                   21 

2  003  96987 

1819    

20 

1,751,402s8 

1820   

1985 

1  697  463s* 

1830    . 

11 

1.  454.38681 

The  above  figures  of  course  do  not  show  the  total  banking 
capital  of  the  state  for  they  apply  only  to  the  incorporated  banks, 
and  not  all  of  those  always  reported;  but  they  indicate  fairly 
well  the  relative  amounts  of  banking  capital  at  the  different 
periods,  and  show  plainly  the  expansion  from  1815  to  1817  as 
well  as  the  subsequent  contraction.  The  same  thing  may  be  seen 
perhaps  more  clearly  from  the  following  diagram. 


84  Report  of  U.  S.  Comptroller  of  the  Currency,  1876,  p.  LXXXV. 

85  Considerations  on  the  Currency  and  Banking  System  of  the  United 
States  —  Gallatin,  p.  103. 

88  A  Short  History  of  Paper  Money  and  Banking  —  Gouge,  p.  88. 

87  Elliot's  Funding  System,  p.  769. 

88  See  table  page  75. 

89  Elliot's  Funding  System,  p.  770. 

For  comment  as  to  reports,  etc.,  see  preceding  pp.  50,  51. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    123 


CHAPTER  VI. 

THE   SECOND   PERIOD  OF   EXPANSION.       183!    TO    1836. 

An  Era  of  Internal  Improvements.  —  The  decade  from 
1830  to  1840  witnessed  the  beginning  of  a  new  era  of  progress 
throughout  the  civilized  world.  One  of  the  most  important 
factors  in  this  progress,  especially  as  it  affected  the  United  States, 
was  the  application  of  steam  to  railroad  transportation  and  trans- 
Atlantic  navigation.  In  1830  railroad  building  was  just  begin- 
ning in  the  United  States,  but  it  advanced  rapidly  during  the  next 
few  years ;  while  canal  construction  was  then  at  its  height.  The 
Erie  Canal  in  1825  opened  the  Great  Lakes  region  to  the  markets 
of  the  Atlantic  coast,  and  facilitated  settlement  of  the  interior. 
The  State  of  Ohio  in  1833  completed  400  miles  of  navigable 
canals  connecting  the  Ohio  River  with  Lake  Erie,  and  the  same 
year  began  work  on  an  extension  of  the  system,  which  when 
completed  in  1847  consisted  of  over  800  miles  of  canals  and  slack- 
water  navigation.  Pennsylvania  and  other  states  were  also  busy 
\in  canal  making.  Canals  costing  a  hundred  million  dollars  were 
begun  or  finished  in  the  years  culminating  in  the  panic  of  1837.* 
The  country  was  in  the  midst  of  an  era  of  internal  improve- 
ments, and  the  possibilities  of  the  future  seemed  unlimited. 

Increase  in  Immigration.  —  These  internal  improvements 
and  the  various  other  enterprises  which  accompanied  or  fol- 
lowed them  created  a  strong  demand  for  labor  and  capital,  and 
large  supplies  of  both  came  from  Europe.  From  the  inaugura- 
tion of  Washington  in  1789  to  that  of  Jackson  in  1829  the  popula- 
tion of  the  United  States  increased  from  about  four  millions  to 
almost  thirteen  millions,  but  very  little  of  that  increase  was  due 
to  immigration.  Probably  not  over  four  hundred  thousand  im- 
migrants were  included  in  that  increase  of  nearly  nine  millions.2 
About  the  latter  date,  however,  immigration  began  in  sufficient 


1  Crises  and  Depressions  —  Burton,  p.  281. 

2  Division  and  Reunion  —  Wilson,  pp.  2  and  3. 

(124) 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    125 

magnitude  to  promote  the  more  rapid  development  of  the  country. 
Thousands  of  these  immigrants  found  their  way  to  Ohio  and 
other  interior  states,  and  formed  no  inconsiderable  part  of  the 
great  westward  movement  then  going  on. 

Growth  of  Population  in  Ohio.  —  The  population  of  Ohio 
increased  much  more  rapidly  during  the  early  30'$  than  it  had 
during  the  early  2o's.  From  1827  to*  1835  the  number  of  white 
males  of  voting  age  in  the  state  increased  by  89,480,  or  61.4%, 
while  during  the  preceding  eight  years  the  increase  had  been 
only  46,965,  or  47.5  %.3  From  1830  to  1840  the  population  of 
the  United  States  increased  32.7%.*  During  the  same  period  the 
population  of  Ohio  increased  62%,  a  percentage  nearly  twice 
that  for  the  country  as  a  whole.  The  total  gain  of  population  in 
Ohio  from  1830  to  1840  was  581,564,  a  number  greater  by  nearly 
50,000  than  its  gain  for  any  other  decade  during  the  century.5 
Ohio  ranked  fifth  among  the  states  in  population  in  1820,  fourth 
in  1830,  and  third  in  1840,  a  position  which  she  was  able  to  hold 
for  half  a  century.6  During  the  decade  1830-40  also,  Ohio  became 
the  first  state  in  the  union  in  the  production  of  wheat  and  corn, 
and  ever  since  has  held  high  rank  as  an  agricultural  state.  Inter- 
nal improvements  had  given  her  markets  for  her  products  and 
an  incentive  to  production, 

Effect  of  Transportation  Facilities.  —  The  development  of 
transportation  facilities  was  perhaps  the  most  conspicuous  feature 
of  this  period  in  the  United  States.  It  gave  an  impetus  to  the 
settlement  of  large  tracts  of  land  not  only  in  Ohio  but  in  other 
states  of  the  Middle  West  and  caused  a  large  increase  in  agri- 
cultural production,  and  abundant  mineral  and  agricultural  prod- 
ucts of  the  country,  hitherto  unavailable  on  account  of  lack  of 
transportation  facilities,  were  made  available  not  only  for  dis- 
tribution throughout  the  United  States  but  also  for  export. 

Foreign  Commerce  and  Foreign  Loans.  —  Both  the  do- 
mestic and  the  foreign  commerce  of  the  country  made  rapid 
strides.  The  value  of  the  imports  and  exports  of  merchandise 


3  See  Chapter  V,  p.  105. 

Statistical  Atlas  of  the  United  States,  1900,  p.  25. 
6 12th  Census  of  the  U.  S.  Bulletin  No.  41,  p.  1. 
8  Statistical  Atlas  of  the  U.  S.,  1900,  plate  21. 


126  Ohio  Arch,  and  Hist.  Society  Publications. 

increased  from  134  million  dollars  in  1830  to  221  millions  in 
i84O.7  The  influence  of  foreign  loans  is  shown  by  the  fact  that 
while  between  1830  and  1837  the  imports  of  merchandise  ex- 
ceeded the  exports  by  $140,000,000,  yet  the  imports  of  specie 
also,  during  this  period,  exceeded  the  exports  by  $44,700,000. 
In  1834,  for  example,  the  exports  of  coin  and  bullion  amounted 
to  only  $400,500,  while  the  imports  totaled  $16,235,374.  The 
foreigners,  instead  of  demanding  the  payment  of  the  trade 
balance  in  specie,  were  leaving  it  invested  in  the  United  States 
and  sending  us  money  besides.  They  were  investing  in  our  new 
railroad  industry  and  more  particularly  in  the  bonds  issued  by 
municipalities  and  by  states  for  internal  improvements,  etc.8 
From  1826  to  1839  the  State  of  Ohio  issued,  to  pay  for  canal 
construction,  6%  stocks  to  the  amount  of  $9,046,123,  all  of  which 
brought  a  premium  except  $20,000  issued  at  par  in  1836.  The 
total  amount  of  these  premiums  was  $591,013.25.  The  highest 
premium  received  was  that  of  1832,  which  was  24%,° 

Period  of  Business  Expansion.  —  The  period  from  the 
crisis  of  1819  to  that  of  1837,  savs  Burton,  "was  the  first  which 
displayed  in  this  country  the  distinctive  features  which'  preceded 
the  crises  of  1873  and  1893.  Jt  afforded  an  illustration  of 
gradual  growth,  expansion,  and  collapse.  The  movement  was 
particularly  marked  from  1831  to  1837,  and  most  active  from 
1834  to  1837. "10  During  this  period  there  was  not  only  a  steady 
growth  in  population,  agriculture,  and  foreign  trade,  but  manu- 
facturing,  having  recovered  from  the  depression  which  followed 
the  War  of  1812,  was  beginning  to  be  developed  on  a  large  scale, 
while  domestic  commerce  and  wealth  had  nearly  doubled.  It 
was  an  era  of  great  territorial  and  business  expansion,  and,  as 
usually  happens,  this  was  accompanied,  especially  towards  the 
close  of  the  period,  by  excesses  which  later  caused  waste  and 
loss. 


7  Statistical  Abstract  of  the  United  States,  1905,  pp.  636-7. 

8  Financial  History  of  the  U.  S.  — Dewey,  p.  226. 
Crises  and  Depressions  —  Burton,  p.  280. 

9  History  of  Ohio  Canals  —  Huntington  &  McClelland,  p.  69. 
There  was  also  an  issue  of  $400,000^at  5%  in  1825,  the  total  amount 

issued  before  1830  being  $3,800,000. 

10  Crises  and  Depressions  —  Burton,  p.  279. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    127 

Excessive  Credit  and  Speculation.  —  A  great  number  of 
enterprises  were  established,  which  were  in  advance  of  the  de- 
mand, and  many  others  which  were  entirely  useless.  There  was 
undue  extension,  of  credit;  while  speculative  operations  attained 
a  volume  never  known  before  in  this  country.  The  demand  for 
western  land  due  to  the  influx  of  new  settlers  was  vastly  in- 
creased by  land  buying  for  speculation.  As  the  market  price  of 
land  frequently  went  way  above  the  government  selling  price, 
there  was  strong  inducement  to  buy  with  the  expectation  of  sell- 
ing it  sooner  or  later  at  a  big  profit.  To  do  this,  money  was 
necessary;  consequently  there  arose  an  enormous  demand  for 
borrowed  money.  This  was  readily  supplied  by  local  banks,  many 
of  which  sprang  up  especially  to  meet  this  temporary  demand. 
All  of  them  were  glad  to  extend  their  circulation  and  increase 
their  loans. 

Rapid  Growth  of  Local  Banking.  —  From  1829  to  1837  the 
number  of  local  banks  reported  in  the  United  States  increased 
from  329  to  634  and  their  capital  from  110.2  million  dollars  to 
290.8  millions;  while  their  circulation  increased  from  48.3  mil- 
lions to  149.2  millions,  and  their  loans  and  discounts  from  137 
million  to  525.1  million.11  That  is,  while  the  number  of  banks 
and  their  capital  practically  doubled,  their  circulation  increased 
three- fold  and  their  loans  and  discounts  nearly  four- fold,  thus 
showing  that  not  only  were  new  banks  started,  but  that  both 
new  and  old  issued  more  notes  and  greatly  increased  their  loans. 
The  loans  of  the  Ohio  banks  doubled  from  January  1835  to 
May  i837.12 

Refusal  to  Recharter  the  United  States  Bank.  —  The  de- 
velopment of  local  banks  was  accelerated  by  the  refusal  to  extend 
the  charter  of  the  United  States  Bank,  which  was  to  expire  in 
1836.  A  bill  to  renew  the  charter  passed  the  Senate  in  June 
1832'  and  the  House  in  July,  but  it  was  vetoed  by  President  Jack- 


11  Figures  for  1829  are  taken  from  Gallatin's  Considerations  on  the 
Currency,  pp.  45,  49,  and  53,  except  those  for  loans  which  are  from 
Dewey's  Financial  History,  p.  225;  figures  for  1837  are  from  Elliot's 
Funding  System,  p.  984. 

See  Appendix,  pp.  289,  290. 

"Elliot's  Funding  System,  p.  1183. 


128  Ohio  Arch,  and  Hist.  Society  Publications. 

son ;  and  when  he  was  re-elected  on  that  issue  in  the  fall  the  fate 
of  the  bank  was  sealed.13  This  gave  an  immediate  impetus  to 
the  development  of  local  banks,  which  was  increased  by  Jack- 
son's determination  at  once  to  remove  the  government  deposits 
from  the  United  States  Bank,  on  the  ground  that  the  public 
funds  were  not  safe  in  the  hands  of  "an  electioneering  machine." 

Withdrawal  of  Public  Funds  from  the  United  States  Bank 
and  their  deposit  in  State  Banks.  —  This  decision  was  made 
effective  as  soon  as  the;  President  could  get  a  new  Secretary  of 
the  Treasury  willing  to  do  his  bidding.  On  September  26,  1833 
an  order  was  issued  by  Secretary  of  the  Treasury,  Roger  B. 
Taney,  directing  that  nearly  ten  millions  of  public  money  then 
in  the  United  States  Bank  should  be  gradually  withdrawn  and  no 
more  deposited  therein;  but  that  henceforth  the  public  funds 
should  be  deposited  in  certain  state  banks.14  The  hope  of  secur- 
ing some  of  these  government  deposits  accelerated  the  increase  in 
local  banks,  and  the  distribution  of  the  funds  among  numerous 
"pet  banks,"  as  the  state  banks  selected  were  familiarly  called, 
increased  opportunities  for  extending  credit,  and  furnished  the 
foundation  for  many  injudicious  enterprises. 

Payment  of  the  National  Debt  and  Distribution  of  the 
Surplus  among  the  States.  —  Another  cause  contributing  to 
the  same  effect  was  the  distribution  among  the  states  of  the 
surplus  revenue  which  occurred  about  this  time  in  the  United 
States  Treasury.  The  growth  in  the  foreign  trade  of  the  country 
had  brought  a  big  increase  in  the  revenues  from  import  duties; 
while  the  sale  of  public  lands,  the  proceeds  of  which  between 
1810  and  1830  had  amounted  to  only  one  or  two  millions  a  year, 
increased  so  rapidly  after  1830  that  in  1835  the  receipts  from 
this  source  were  nearly  $  15, 000,000. 15  In  January  of  the  latter 
year  the  national  debt  was  paid  off  and  a  prediction  made  by 
Jefferson  fifty  years  before  was  about  to  be  fulfilled,  namely,  the 


13  Division  and  Reunion  —  Wilson,  p.  79. 
"Division  arid  Reunion  —  Wilson,  p.  81. 
Financial  History  of  the  U.  S.  —  Dewey,  p.  206. 
"The  Public  Domain  —  Donaldson,  p.  17. 
See  Appendix,  pp.  158,  265. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    129 

United  States  Treasury  was  the  possessor  of  a  surplus.16  A 
Senate  committee  estimated  that  it  would  average  nine  million  a 
year  for  the  next  eight  years.  What  was  to  be  done  with  it? 
The  protected  interests,  like  their  successors  of  today,  did  not 
want  the  tariff  reduced,  so  they  advocated  a  distribution  of  the 
surplus  among  the  states.  This  idea  also  found  favor  in  other 
quarters.  But  the  president  and  others  of  his  party  had  scruples 
against  making  direct  gifts  to  the  states.  So  it  was  finally  decided 
to  make  the  distribution  as  a  loan  to  the  states,  though  without 
interest,  to  be  recalled  at  the  pleasure  of  Congress.  This  act 
providing  for  the  distribution  was  passed  June  23,  i836,17  and 
under  it  somewhat  over  $28,000,000  was  deposited  with  the  states.  ' 
The  amount  was  in  reality  a  gift  and  was  never  expected  to  be 
recalled.  It  is  still  carried  on  the  books  of  the  treasury  as  un- 
available funds,  $28,ioi,644.18 

Ohio's  share  of  this  surplus  revenue,  amounting  to  $2,007,- 
260.34,  was  distributed  among  the  several  counties;  and  the 
county  commissioners  were  authorized  to  loan  these  funds  at 
6%  interest  to  any  incorporated  canal,  railroad,  or  turnpike  com- 
pany, or  to  any  other  work  of  internal  improvement  in  the  county, 
upon  security  equal  to  double  the  amount  loaned.  Any  of  the 
money  not  loaned  as  above  cauld  be]  loaned  to  the  state  in  such 
amount  as  the  latter  desired,  or  to  individuals  at  from  6  to  7%  -^ 
interest.  Of  the  total  amount  received  by  the  state,  $545,681.93 
was  expended  in  the  construction  of  internal  improvements.19 

Relation  of  Credit  and  Speculation.  —  The  distribution  of 
the  surplus  among  the  states  and  the  deposit  of  the  public  funds 
with  local  banks  encouraged  many  of  the  latter  to  make  loans 
larger  than  their  assets  would  warrant,  especially  as  there  was 
such  a  strong  demand  for  money  for  purposes  of  speculation. 
The  notes  issued  by  the  bank  to  the  speculator  would  commonly 
be  invested  in  government  land,  as  that  was  the  main  subject  of  ^ 


16  Financial  History  of  the  U.  S.  —  Dewey,  pp.  217  and  219. 
"United  States  Statutes  at  Large,  Vol.  V,  p.  55. 
"Financial  History  of  the  U.  S.  —  Dewey,  pp.  219-21. 
Division  and  Reunion  —  Wilson,  pp.  86-88. 

"  History  of  Ohio  Canals  —  Huntington  &  McClelland,  pp.  73  and  74. 
9 


130  Ohio  Arch,  and  Hist.  Society  Publications. 

speculation  at  the  time.  The  land  receiver  usually  would  then 
deposit  the  notes  in  a  local  bank,  frequently  in  the  same  bank 
that  issued  them,  and  again  they  would  be  ready  for  issue,  per- 
haps to  the  same  speculator,  to  purchase  more  land.  Thus  the 
local  banks  and  the  government  surplus  became  involved  in  a 
common  network  of  credits.  The  paying  off  of  the  national  debt, 
too,  helped  the  land  speculation,  since  money  formerly  loaned  to 
the  government  was  thus  set  free  for  other  investments.20 

Rapid  Increase  Bank  Notes  and  Other  Money  in  the 
United  States.  —  While  land  speculation  was  the  central  point 
in  the  expansion  of  the  period,  and  reached  its  maximum  in  the 
West  and  Southwest,  where  the  rapid  increase  that  occurred  in 
the  price  of  wheat  and  cotton  and  other  farm  products  helped 
to  boom  the  lands  that  produced  them ;  yet  speculation  of  every 
sort  and  in  all  parts  of  the  country  received  a  wonderful  impetus. 
Money  was  plentiful,  and  as  much  of  it  did  not  represent  capital, 
it  was  easy  to  obtain.  Consequently  times  were  flush  and  nearly 
everybody  ran  into  debt.21  The  total  amount  of  money  in  the 
United  States  increased  from  93  million  dollars  in  1830  to  222 
million  in  1837,  a  point  not  reached  again  until  1847.  It  is 
estimated  that  about  two-thirds  of  this  money  consisted  of  out- 
standing bank  notes,  the  latter  increasing  from  61  million  in  1830 
to  149  million  in  1837,  which  high  point  was  not  reached  again 
until  185-1. 22 

Bank  Circulation  in  Ohio.  —  In  the  rapid  expansion  of 
bank  paper  during  this  period  Ohio  had  her  full  share.  In  one 
year,  from  1835  to  1836,  the  reported  circulation  of  Ohio  banks 
increased  from  5.2  million  dollars  to  9.7  million,  while  the  eleven 
authorized  local  banks  operating  in  the  state  in  1830  had  become 
33  in  1837,  an  increase  of  exactly  three-fold.23  There  are  no 


20  Financial  History  of  the  U.  S.  —  Dewey,  pp.  225  and  226. 

21  Financial  History  of  the  U.  S.  — Dewey,  p.  226. 
Division  and  Reunion  —  Wilson,  p.  89. 

Men  and  Measures  of  Half  a  Century  —  McCulloch,  p.  58. 
23  Report  of  the  United   States   Comptroller  of  the   Currency,   1908, 
p.  145. 

23  Report  of  U.  S.  Comptroller  of  the  Currency,  1876,  p.  XCVII. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    131 

figures  available  as  to  the  circulation  of  the  Ohio  banks  in  the 
early  years  of  the  decade,  but  it  was  probably  not  large. 

It  may  be  recalled  that  the  25  chartered  banks  in  Ohio  in 
1819,  had  a  circulation  of  only  about  1.3  million  dollars;24  while 
in  1826  the  statement  was  made  that  some  years  before  paper 
currency  had  almost  been  withdrawn  from  circulation  in  Cin- 
cinnati, the  largest  city  in  the  state.25  In  1829,  however,  it  was 
said  that  there  was  comparatively  plenty  of  money  in  the  state,28 
and  at  that  time  Ohio  bank  notes  were  at  a  discount  of  from  2^ 
to  3-!%  in  Philadelphia.27  In  1831,  however,  the  discount  was 
only  about  iJ/^%,28  thus  indicating  that  the  circulation  of  Ohio 
banks  could  not  have  been  much  expanded.  It  is  probable  that 
their  circulation  at  that  time  was  between  one  and  two  million  s 
dollars,  perhaps  nearer  the  first  figure  than  the  second.  /. 

Charter  of  the  Bank  of  Norwalk.  —  In  fact  there  was' 
quite  a  demand  for  money  in  Ohio  at  this  time,  which  took  the 
form  of  a  demand  for  more  banking  facilities,  the  function  of  a 
bank  considered  most  important  in  this  country  in  those  days 
being  that  of  note  issue.29  Onjieb.  25,  1831  the  legislature 
granted  a  charter  to  the  Bank  of  Norwalk,  with  an  authorized 
capital  stock  of  $ioo,ooo.30  This  was  the  only  bank  chartered  by 
the  legislature  that  session,  however,  and  was  not  sufficient  to 
meet  the  demand.  Consequently  there  was  a  resort  to  the  reviv- 
ing of  old  banks. 

Revival  of  the  Dayton  Bank.  —  As  early  as  Jan.  18,  1831 
the  Dayton  Republican  in  speaking  of  the  importance  and  need 
of  a  bank  at  Dayton,  had  called  attention  to  the  fact  that  there 
was  a  bank  in  the  city  whose  charter  would  not  expire  for  13 
years  yet,  and  suggesting  that  it  ought  to  be  put  into  operation 
again.31  Another  Dayton  paper  a  few  months  later  announced 


24  See  Chapter  III,  p.  73. 

25  See  Chapter  V,  p.  114. 

26  See  Chapter  V,  p.  116. 

27  See  Appendix,  p.  261. 

28  Ibid. 

29  Money,  Trade  and  Industry  —  Walker,  pp.  259  and  299. 
'"Local  Laws  of  Ohio,  Vol.  XXIX,   (1831),  p.  162. 

31  This  was   the   Dayton   Manufacturing  Company.     See   Chapter  I, 
p.  36.     Also  Knox's  History  of  Banking,  p.  676. 


132  Ohio  Arch,  and  Hist.  Society  Publications. 

that  the  Dayton  Bank,  which  had  wound  up  its  business  a  few 
years  before  and  paid  its  stockholders  the  capital  invested,  had 
been  revived,  its  capital  stock  filled  up  and  actually  paid  in,  and 
its  business  resumed  on  a  good  stable  foundation,  which  inspired 
confidence  and  gave  assurance  that  the  revival  of  this  bank  would 
prove  a  public  benefit.32 

Opening  of  the  Commercial  Bank  of  Cincinnati.  —  It  will 
be  recalled  that  on  Feb.  n,  1829  the  legislature  had  authorized 
the  Commercial  Bank  of  Cincinnati  to  begin  business  with  a 
capital  stock  of  $100,000  but  that  its  stock  had  remained  unsub- 
scribed owing  to  the  pressure  for  capital  in  other  lines.33  On 
Feb.  12,  1831,  however,  the  commissioners  in  charge  of  the 
organization  of  this  bank  advertised  that  two  days  later  its  stock 
subscription  books  would  be  opened,  and  each  day  thereafter 
for  30  days,  within  which  time  $10  on  each  share  must  be  paid 
by  the  subscribers  according  to  charter.34  This  stock  was  all 
quickly  taken,  a  great  part  of  it  by  foreign  capitalists,  and  arrange- 
ments were  at  once  made  for  the  immediate  commencement  of 
I  business.35  On  May  28  the  stock  in  this  bank  rose  from  5  to 
\I5%  premium,  and  before  the  day  closed  17%  was  asked,  at 
which  figure  the  price  remained  firm.  Orders  to  purchase  this 
stock  received  from  eastern  cities  were  said  to  have  contributed 
to  this  rise.36 

Tax  on  Dividends  of  Banks  increased  to  5%.  —  A  pro- 
vision in  the  charter  granted  this  bank  Feb.  n,  1829,  had  pro- 
vided that  it  should  pay  to  the  state  a  tax  of  4%  on  its  annual 
dividends.37  That  was  the  rate  then  paid  by  all  the  local  banks 

"Dayton  Journal  and  Advertiser,  Aug.  30,  1831. 

The  name  of  Dayton  Manufacturing  Co.  was  changed  to  Dayton 
Bank.  Local  Laws  of  Ohio,  Vol.  XXX,  (1832),  p.  14. 

33  See  Chapter  V,  p.  116. 

"The  Sentinel  and  Star  in  the  West,  (Cincinnati),  Mar.  12,  1831, 
p.  160. 

"The  Dayton  Journal  and  Advertiser,  Apr.  19,  1831. 

"The  Republican  (Dayton),  May  31,  1831. 

"Report  of  State  Auditor,  Jan.  16,  1834. 

Laws  of  Ohio,  Vol.  XXVII,   (1829),  p.  46. 

See  also  arguments  in  cases  of  Ohio  Life  Insurance  and  Trust 
Company  vs.  Debolt,  16  Howard  421 ;  and  Piqua  Branch  of  State  Bank 
of  Ohio  vs.  Knoop,  16  Howard  379. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    133 

in  the  state  under  the  tax  law  of  Feb.  5,  i825.38  But  in  1831 
about  the  time  the  Commercial  Bank  of  Cincinnati  began  business 
a  change  was  made  in  this  law  which  resulted  in  giving  this  bank 
somewhat  of  an  advantage  over  the  rest  of  the  local  banks  so  far 
as  state  taxation  was  concerned. 

As  early  as  Jan.  14,  1830  the  committee  on  finance  of  the 
Ohio  Senate,  to  whom  had  been  referred  a  resolution  as  to  the 
expediency  of  taxing  the  capital  of  banks,  insurance  companies, 
etc.,  on  an  ad  valorem  basis,  reported  against  that  plan  and  in 
favor  of  retaining  the  existing  system.  They  gave  as  reasons 
for  preferring  income  as  the  basis  of  taxation:  first,  that  it  was 
more  agreeable  to  the  stockholders  and  directors;  second,  the 
fact  that  the  charters  of  some  of  the  banks  limited  the  tax  to 
4%  on  dividends,  which  by  implication  might  exclude  other 
forms  of  taxation.  The  committee  concluded  that  no  legislative 
act  on  the  subject  was  then  required.39  So  the  matter  went  over. 

At  the  next  session  of  the  legislature,  however,  the  question 
of  bank  taxation  came  up  again,  with  the  result  that  on  March 
12,  1831,  an  act  to  tax  banks,  insurance,  and  bridge  companies 
was  passed,  which  increased  the  rate  of  the  tax  on  bank  dividends 
from  4%  to  5%.40  Under  this  law  the  directors  of  banks,  in- 
surance companies,  and  bridge  companies  were  to  furnish  the 
state  auditor  with  a  statement  of  all  dividends,  and  the  auditor 
was  then  to  draw  for  5%  thereon.  A  penalty  not  to  exceed 
$1000  was  provided  for  failure  to  furnish  such  statement  or 
refusal  to  pay  the  auditors'  draft.  This  law  operated  on  all  the 
local  banks  in  Ohio,  except  the  Commercial  Bank  of  Cincinnati. 
The  latter  paid  4%  on  its  dividends  under  its  charter,  which 
exempted  it  from  general  taxation  under  a  general  law.41 

The  Bank  of  Zanesville  Chartered.  —  In  the  session  of 
1832  the  legislature,  like  its  predecessor  of  1831,  chartered  only 
one  bank.  This  was  the  Bank  of  Zanesville,  at  Zanesville,  Ohio, 


38  See  Chapter  V,  p.  112. 
89  Ohio  Senate  Journal,  1830,  p.  238. 

40 Laws  of  Ohio,  Vol.  XXIX,    (1831),  p.  302.     Also  3  Chase  1820. 
41  See  argument   for  plaintiff  in  case   of   Ohio   Life   Insurance  and 
Trust  Co.  vs.  Henry  Debolt.  — 16  Howard  421. 


134  Ohio  Arch,  and  Hist.  Society  Publications. 

which  was  granted  a  charter  on  Jan.  13,  i832.42  Its  authorized 
capital  stock  was  $300,000;  but,  as  happened  the  year  before, 
one  new  bank  was  not  all  that  was  required. 

Re-opening  of  the  Commercial  Bank  of  Lake  Eric.  -  The 
demand  for  more  banking  facilities  in  the  state  brought  about 
the  revival  of  another  old  bank  early  in  1832.  This  was  theCom- 
merical  Bank  of  Lake  Erie,  which  had  been  chartered  originally 
by  the  bonus  law  of  Feb.  23,  1816,  43  and  had  begun  business  in 
Cleveland  in  August  of  that  year  with  Alfred  Kelley,  President, 
and  Leonard  Case,  Cashier.44  It  had  been  unable  to  survive  the 
crisis  of  1818-19,  however,  and  had  failed  in  i82o.45  In  the 
winter  of  1832  steps  were  taken  to  revive  this  institution.  On 
Jan.  3,  1832  the  state  auditor  made  a  report  to  the  legislature  on 
this  bank,  in  which  he  said  its  authorized  capital  stock  had  been 
looo  shares  at  $100  each,  with  the  privilege  of  extending  this  to 
$500,000.  He  added  the  number  subscribed  was  1269,  and  the 
amount  paid  $43,797-46  On  April  2,  1832  the  Commercial  Bank 
of  Lake  Erie  was  reorganized  with  Leonard  Case,  President,  and 
Truman  P.  Handy,  Cashier.47  A  large  majority  of  the  stock 
v  was  said  to  be  held  by  the  Dwights  of  New  York  and  Mass- 
achusetts  and  their  friends,48 

Scarcity  of  Money  in  Ohio.  —  Notwithstanding  the 
chartering  of  the  new  banks  of  Norwalk  and  Zanesville,  the  re- 
vival of  these  old  banks  in  Dayton  and  Cleveland,  and  the  opening 
up  of  the  Commercial  Bank  of  Cincinnati  after  a  two  years'  delay, 
the  pressure  for  more  money  in  the  state  continued  to  increase. 
This  was  intensified  by  Jackson's  message  of  July,  1832,  vetoing 
the  bill  to  renew  the  charter  of  the  United  States  Bank.49  A  Cin- 
cinnati writer  for  the  New  York  Courier  and  Enquirer  of  Aug. 
3,  1832  says:  "The  distress  for  money  here  at  present  is  greater 


42  Local  Laws  of  Ohio,  Vol.  XXX,  (1832),  p.  94. 

43  See  Chapter  II,  p.  47. 

"Magazine  of  Western  History,  Vol.  II,  p.  272. 

45  Ibid. 

49  Ohio  House  Journal,  1832,  p.  155. 

47  Magazine  of  Western  History,  Vol.  II,  p.  272. 

48  Republican,  (Dayton),  Apr.  10,  1832. 

49  See  preceding,  p.  127. 

Also  Division  and  Reunion  —  Wilson,  p.  83. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War     135 

than  can  well  be  imagined,  and  the  branch  bank  is,  from  neces- 
sity in  prospect  of  winding  up,  curtailing.  We  have  one  other 
bank  in  the  place  and  its  capital  but  $500,000.  Money  can  be 
lent  upon  mortgages  on  good  city  property  at  from  12  to  15% 
when  the  security  is  unquestionable  and  worth  at  least  100%  / 
more  than  the  amount  loaned.  The  brokers  get  readily  one 
quarter  per  cent  per  day!"50 

Revivalof  the  Project  for  a  State  Bank.  —  Throughout 
the  state  the  question  of  what  should  be  done  became  a  matter 
of  much  agitation.  Gov.  Duncan  Me  Arthur  in  a  political  ad- 
dress of  Sept.  n,  1832,  declared  in  favor  of  a  re-charter  of  the 
United  States  Bank,  or  other  bank  not  a  "treasury  bank"  or  under 
the  control  of  the  Executive.52  The  project  of  a  State  Bank  was 
revived  and  generally  discussed  that  fall  and  winter.53 

Report  of  Senate  Committee  in  favor  of  State  Bank.  — 

The  Governor's  Message  of  Dec.  4,  1832  discussed  the  question, 
and  on  Jan.  29,  1833  the  Senate  committee  on  finance  and  a 
circulating  medium,  to  which  that  part  of  the  message  had  been 
referred,  reported  that  the  banking  capital  of  local  banks  in  Ohio 
actually  employed  was  estimated  at  $2,000,000,  while  the  amount  * 
needed  was  probably  not  over  8  to  10  million.  The  committee 
was  of  the  opinion  that  a  State  Bank  in  which  the  State  should 
own  1/5  the  stock  and  elect  that  proportion  of  the  directors, 
would  best  fill  the  vacuum  and  establish  a  sound  and  uniform 
currency.54 

Bill  before  Legislature  for  State  Bank.  —  A  bill  was  in- 
troduced before  the  legislature  which  provided  for  a  state  loan 
of  $7,000,000  at  4%  as  a  means  of  raising  funds  to  organize  a  / 
State  Bank  with  branches,  somewhat  on  the  plan  of  the  Louis- 
iana State  Bank,  the  subscriptions  of  stock  in  the  bank  to  be 
secured  by  real  estate,  and  the  State  to  subscribe  for  part  of 


^Niles,  42:436.     Aug.  18,  1832. 

51  Division  and  Reunion  —  Wilson,  p.  81. 

^Niles,  43:89.     Oct.  6,  1832. 

53  Dayton  Jour.  &  Advertiser,  Dec.  4,  1832. 

Dayton  Whig  &  Miami  Democrat,  Dec.  29,  1832. 

"Ohio  Senate  Journal,  1833,  p.  390. 


136  Ohio  Arch,  and  Hist.  Society  Publications. 

the  stock  directly.  The  idea  was  for  this  bank  to  have  a  practical 
monopoly  of  banking  in  the  state.55 

Subject  postponed  till  December  1833.  —  Two  other  bills 
were  reported  to  the  legislature,  for  the  incorporation  of  a  State 
Bank,  but  none  of  the  three  could  command  sufficient  support  to 
effect  its  passage,  and  doubt  was  expressed  as  to  whether  a 
majority  in  the  legislature  were  not  opposed  to  a  State  Bank 
in  any  shape.56  There  were  also  "innumerable  applications  for 
local  banks,"  and  the  opinion  was  expressed  while  the  State  Bank 
bill  was  pending  that  the  only  reason  to  anticipate  a  failure  of  its 
passage  was  the  jarring  interests,  excited  by  the  various  applica- 
tions for  local  banks,  some  of  which  were  pressed  with  strenuous 
efforts.  To  buy  these  off,  it  was  said,  it  would  be  necessary  to 
give  them  branches  of  the  State  Bank.57  All  sorts  of  objections 
were  raised  to  the  State  Bank  as  proposed.58  A  minority  report 
of  the  House  Committee  on  a  State  Bank,  on  Feb.  2,  reported 
against  its  being  established  that  session :  first,  because  the  situa- 
tion did  not  then  call  for  it;  second,  because  public  opinion  was 
not  fully  expressed.59  Probably  few  were  surprised  when  early  in 
February  it  was  announced  that  by  common  consent  the  project 
was  to  lie  over  until  the  next  session  of  the  legislature.60  On 
Feb.  14,  the  bill  was  taken  up  and  postponed  until  the  following 
December.61 

Two  Million-Dollar  Banks  authorized  in  Cincinnati.  —  In- 
stead of  passing  a  bill  to  incorporate  a  State  Bank,  which  should 
control  all  the  monied  institutions  of  the  state,  the  legislature 
contended  itself  for  that  session  with  authorizing  the  Commer- 
cial Bank  of  Cincinnati  to  increase  its  capital  stock  from  $500,000 
to  $i,ooo,ooo,62  and  granting  a  charter  to  the  Franklin  Bank  of 


55  Dayton  Journal  and  Advertiser,  Jan.  8,   1833. 

Dayton  Republican,  Jan.  15,  1833. 

Niles,  43  :330,  Jan.  19,  1833. 

68  Dayton  Journal,  Feb.  12,  1833.    Also  Niles,  44  :2,  Mar.  2,  1833. 

5T  Dayton  Journal  and  Advertiser,  Jan.  8,  1833. 

68  Dayton  Journal,  Jan.  15  and  22,  1833. 

59  Ohio  House  Journal,  1833,  p.  403. 

60  Dayton  Republican,  Feb.  5,  1833. 

61  Dayton  Journal,  Mar.  5,  1833. 
6'-'  Niles,  43  :387,  Feb.  9,  1833. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War,    137 

Cincinnati,   on   Feb.   19,   1833,  which  authorized  it  to  organize 
with  a  capital  stock  of  $i,ooo,ooo.63 

Message  of  Governor  Lucas,  December  1833.  —  NotwitrbL 
standing  these  considerable  additions  to  the  banking  capital  of 
the  state  there  still  remained  a  deficiency  in  the  circulating 
medium.  In  commenting  on  this,  Gov.  Robert  Lucas,  in  his 
message  of  Dec.  3,  1833,  spoke  of  the  prosperity  of  the  people 
and  mentioned  several  causes  ascribed  for  the  deficiency;  but 
added  that  he  conceived  the  latter  to  be  the  natural  result  of  the 
termination  of  the  state's  public  expenditures,  about  $5,000,000  -x 
having  within  a  few  years  been  expended  within  the  state  for 
canal  building.  This  sum,  he  continued,  had  during  the  progress 
of  the  work  been  thrown  into  circulation  and  had  formed  a  con- 
siderable part  of  the  currency  of  the  state;  so  that  its  withdrawal 
from  the  floating  capital  of  the  state  due  to  the  termination  of 
the  public  expenditures  and  the  ordinary  course  of  business  was 
severely  felt  by  a  certain  portion  of  the  community.  As  a 
remedy  he  recommended  a  State  Bank.64 

Banking  Capital  in  Ohio  held  by  Non-Residents.  —  One 

of  the  features  of  the  State  Bank  bill  that  had  been  before  the 
legislature  the  previous  session  was  a  provision  that  none  but 
citizens  of  Ohio,  who  were  owners  of  real  estate  situated  in 
Ohio,  should  be  subscribers  to  its  stock.65  Much  of  the  banking  ' 
capital  employed  in  Ohio  at  that  time  was  owned  by  non-resi- 
dents. And  the  argument  was  brought  forward  that  a  State 
Bank  would  mean  a  big  saving  to  the  people  of  Ohio  through 
reducing  the  large  interest  payments  then  being  paid  on  this 
foreign  capital. 

In  arguing  in  favor  of  the  State  Bank  which  had  just  been 
advocated  by  Governor  Lucas,  in  the  message  referred  to  above, 
the  Ohio  Monitor  quotes  from  the  Cincinnati  Republican  some 


63  Local  Laws  of  Ohio,  Vol.  XXXI.     (1833),  p.  123. 

64  Ohio  House  Journal,  1834,  p.  9. 

65  A  further  provision  was  that  the  subscribers  should  not  transfer 
their  stock  to  persons  differently  situated  until  after  one  year,  when  they 
might  transfer  it  to  any  owner  of  real  estate  in  Ohio.  — Dayton  Repub- 
lican, Jan.  15,  1833. 


138  Ohio  Arch,  and  Hist.  Society  Publications. 

figures  as  to  the  amount  of  banking  capital  then  employed  in 
Ohio. 

BANKING  CAPITAL  IN  OHIO  IN  DECEMBER,   1833. 

Capital  employed  in  Branches  of  United  States  Bank   (prac- 
tically all  held  by  non-residents) $1,700,000 

Capital  of  local  banks  held  by  non-residents 1,650,000 


Total  held  by  non-residents $3,350,000 

Capital  of  local  banks  held  by  citizens  of  Ohio 1,380,000 


Total  amount  of  banking  capital  employed  in  Ohio....       $4,730,000 

Annual  Cost  of  Foreign  Banking  Capital  to  People  of 

Ohio.  —  The  article  then  goes  on  to  say  that  on  all  this  foreign 
capital  the  people  were  paying  about  9%  interest  each  year, 
since  the  dividends  of  the  banks  ranged  from  8  to  10%  a  year; 
that  on  the  $3,350,000  of  stock  held  by  non-residents  this  in- 
terest amounted  to  $301,500,  which  was  carried  out  of  the 
state  and  pocketed  by  eastern  and  foreign  capitalists.  The  point 
was  then  made  that  the  money  necessary  to  organize  a  State 
Bank  could  be  obtained  on  long  time  state  bonds  directly  from 
the  East  or  Europe  at  4%,.  That  is,  that  the  difference  between 
4%  and  9%,,  or  5%,  amounting  to  $167,500,  would  represent 
the  annual  saving  to  the  state  under  the  proposed  new  system. 
In  other  words,  the  article  continued,  under  the  proposed  system 
the  same  amount  of  interest  as  was  then  paid  on  3^  millions 
of  foreign  capital  would  furnish  nearly  $8,ooo,ooo.66 

Ohio  Bank  Notes  depreciated  beyond  Vicinity  of  Issuing 
Bank.  —  The  point  was  also  made  that  the  currency  furnished 
by  the  local  banks  was  but  a  poor  one  anyway,  because  the 
notes  of  a  local  bank  might  be  very  good  in  the  immediate 
vicinity  of  the  institution  issuing  them;  but  by  the  time  they 
had  traveled  one  hundred  miles  from  home,  they  were  refused 
unless  at  a  discount,  or,  what  too  frequently  happened,  they 
were  refused  at  any  price.67 

Financial  Disturbances  early  in  1834.  —  Soon  aker  that 
the  bills  of  Ohio  banks  in  general  were  said  to  be  at  from  4 


66  Ohio  Monitor,  Dec.  12  and  19,  1833. 
"Ohio  Monitor,  Dec.  19,  1833. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    139 

5%  discount  at  Cincinnati,  and  several  of  the  Ohio  banks 
were  reported  to  be  very  much  embarrassed.68  By  January 
1834,  drafts  on  New  York,  which  had  until  shortly  before  been^  / 
easily  procured  at  i%,  could  scarcely  be  obtained  at  all  in 
Ohio.  A  letter  of  January  10,  1834,  from  a  Cleveland  gentleman 
to  one  in  New  York  states:  "If  matters  continue  long  as  they 
now  are,  the  exchange  will  be  3  or  4%  on  New  York."69  He 
attributed  this  to  the  embarrassed  state  of  money  matters  in  the 
East.  That  section  was  then  undergoing  one  of  those  dis- 
turbances to  commerce,  banking,  and  business  generally,  which 
were  so  numerous  from  1834  to  1838.™  And  the  pressure  was 
beginning  to  be  felt  in  the  West  and  Southwest.  Many  doleful 
letters  on  the  subject  were  published  about  that  time  in  Niles 
Register  from  Mississippi  and  Louisiana.71  And  that  paper 
of  the  date  of  April  5,  1834,  prints  a  letter  from  an  Ohio  man 
telling  of  the  general  distresses.72  The  Albany  Daily  Advertiser 
about  that  time  reported  that  some  of  the  Ohio  banks  had 
stopped  specie  payment  and  that  others  were  "tottering."73 

Defeat  of  the  State  Bank  Bill.  —  The  suspended  and  tot- 
tering Ohio  banks  referred  to  in  the  article  mentioned  above 
were  probably  unauthorized  banks,  many  of  which  were  con-  /* 
tinually  springing  up  in  the  state  during  this  period.  But  the 
number  of  chartered  banks  in  the  state  was  also  largely  in- 
creased early  in  1834.  The  opposition  to  the  State  Bank  on 
the  part  of  many  local  banks  that  wanted  charters  from  the 
legislature  was  so  strong  that  the  bill  providing  for  a  State 
Bank  was  killed  in  the  legislature  in  January,  the  vote  against 
it  in  the  Senate  on  January  2Oth  being  19  to  I5u85 

More  Local  Banks  Chartered.  —  Soon  after  the  State  Bank 
bill  was  defeated  the  legislature  proceeded  to  grant  charters 
to  a  batch  of  ten  new  local  banks,  the  combined  authorized 
capital  of  which  amounted  to  $4,400,000.  The  name,  location, 


68  Niles,  45:434,  Feb.  22,  1834. 

69  Niles,  45  :373,  Jan.  25,  1834. 

70  Financial  History  of  the  U.  S.-— Dewey,  pp.  188  and  218. 

71  Niles,  46 :86,  Apr.  5,  1834. 

72  Ibid.,  p.  84. 

"Niles,  46:18,  Mar.  8,  1834. 


140 


Ohio  Arch,  and  Hist.  Society  Publications. 


authorized  capital  stock,  and  date  of  charter  of  each  of  these 
banks  are  shown  in  the  following  table. 

BANKS    CHARTERED   BY   THE   OHIO   LEGISLATURE   IN    1834. 


_CJ 

03 

o3 

*%* 

Name. 

Location. 

CJ 

&    N 

O 

03   1-. 

<L> 

.ti  o 

03 

p 

u 

74  Ohio  Life  Insurance  &  Trust  Co. 

Cincinnati  ..  . 

Feb.    12.. 

$2,000,000 

75  Bank  of  Wooster 

\Vooster 

Feb    14 

100,000 

78  Bank  of  Massillon 

Massillon 

Feb    27 

200,000 

"Bank  of  Xenia 

Xenia 

Mar     1 

100,000 

78  Bank  of  New  Lisbon  

New  Lisbon.  . 

Mar.     3.... 

100,000 

79  Lafayette  Bank  of  Cincinnati.. 

Cincinnati  .  .  . 

Mar.    3.... 

1,000,000 

80  Bank  of  Circleville 

Circleville 

Mar     3  

200,000 

81  Bank  of  Cleveland 

Cleveland 

Mar     3.    .. 

300,000 

82  Bank  of  Sandusky 

Sandusky 

Mar     3.... 

100,000 

83  Clinton  Bank  of  Columbus  

Columbus  .  .  . 

Mar.    3.... 

300,000 

The  Clinton  Bank  of  Columbus  organized  by  office- 
holders. —  Of  the  bank  last  mentioned  above,  the  Clinton 
Bank  of  Columbus,  it  was  claimed  that  the  agents  for  lobbying 
it  into  existence  had  "covertly  and  hypocritically  stifled  the  State 
Bank  (an  actual  democratic  bank;  the  People's  bank)";  and  the 
charge  was  also  made,  within  a  year  or  two  of  its  incorpora- 


74  Local  Laws  of  Ohio,  Vol.  XXXII,  (1834),  p.  68. 

75  Ibid.,  p.  76. 

76  Ibid.,  p.  197. 

77  Page  283. 

78  Page  293. 

79  Page  299. 

80  Page  343. 

81  Page  407. 
83  Page  412. 

83  Page  419. 

84  See  Dayton  Jour.,  Mar.  11,  1834. 
88  Dayton  Jour.,  Feb.  11,  1834. 
Niles,  45  :396,  Feb.  8,  1834. 

See  following,  page  162. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War     141 

tion,  that  its  directors  were  largely  state  and  national  office- 
holders, the  Ohio  Monitor  of  Feb.  4,  1836,  stating  that  "the 
directory  of  that  bank  contains  four  United  States  office- 
holders (the  whole  of  the  civil  officers  in  the  place)  and  two 
state  officers."  The  stock  of  this  bank  was  all  subscribed  by 
September  and  notice  published  that  the  meeting  for  the  elec- 
tion of  its  thirteen  directors  would  be  held  Oct.  2,  i834-86 

Capital  Stock  of  new  Banks  over-subscribed.  —  In  fact 
the  capital  stock  of  all  ten  of  these  banks  was  rapidly  taken  up 
in  spite  of  the  financial  disturbance  early  in  1834.  On  the 
day  early  in  April  when  the  books  were  opened  in  the  town  of 
Wooster  for  receiving  subscriptions  to  the  stock  of  the  Bank 
of  Wooster,  $25,800  more  than  the  whole  amount  authorized 
was  subscribed,  nearly  all,  too,  by  citizens  of  the  town  and 
county.  Towards  the  close  of  the  time  allowed  for  the  books 
to  remain  open  there  was  a  press  to  get  stock,  and  it  was  said 
that  had  the  amount  authorized  been  50%,  more,  it  would  easily 
have  been  subscribed.87 

When  the  books  for  subscription  to  the  stock  of  the  Bank 
of  Cleveland  closed  on  April  10,  in  accordance  with  the  pro- 
visions of  its  charter,  $393,200  had  been  subscribed,  an  excess 
of  $93,200  over  the  capital  authorized.  The  Dayton  Journal 
of  April  15,  1834,  in  commenting  on  this  observed:  "The 
promptness  with  which  the  stock  of  this  bank  has  been  taken 
up,  is  a  flattering  indication  of  the  continued  prosperity  of  the 
country  and  the  confidence  of  capitalists  in  the  value  of  the 
investment.  The  time  for  opening  the  books  was  the  most 
unfavorable  that  could  be,  yet  with  all  the  cry  of  pressure  and 
panic,  there  seems  to  be  no  lack  of  money  when  a  profitable 
investment  is  to  be  made." 

The  Ohio  Life  Insurance  and  Trust  Company.  —  Only 
$1,000,000  of  the  capital  stock  of  the  Ohio  Life  Insurance  and 
Trust  Company  was  for  banking  purposes,  and  its  privilege  of 
issuing  notes  was  to  expire  January  i,  1843,  the  date  when  most 


86  Ohio  Monitor,  Oct.  1,  1834. 

87  Ohio  Monitor,  Apr.  16,  1834. 
Also  Dayton  Journal,  Apr.  15,  1834. 


142  Ohio  Arch,  and  Hist.  Society  Publications. 

of  the  bank  charters  in  the  state  expired.  Besides  the  power 
of  note  issue  and  other  banking  powers,  this  company  was 
given  authority  to  insure  lives,  to  purchase  and  grant  annuities, 
to  receive  and  execute  trusts  of  all  kinds,  and  to  buy  and  sell 
drafts  and  bills  of  exchange.  Its  management  was  in  the  hands 
of  twenty  trustees  who  must  individually  be  stockholders  to 
the  amount  of  $5,ooo.88 

The  institution  was  one  of  the  largest  in  the  country,  and 
it  aroused  a  good  deal  of  opposition  among  those  who,  even  at 
that  date,  feared  the  growth  of  corporate  monopoly.  It  was 
bitterly  denounced  as  placing  dangerous  power  in  the  hands 
of  a  few.89  The  following  paragraph  from  an  address  of  the 
Hon.  R.  T.  Lytle  in  1835  illustrates  the  popular  feeling  regard- 
ing "this  new  and  dangerous  monopoly,"  which  loaned  money 
all  over  the  state  on  real  estate  security.90 

"The  rate  of  interest  at  which  they  let  out  money,  is 
nominally  7%,  but  in  fact  (in  most  cases)  the  rate  averages 
from  10  to  15.  .  .  .  For  instance,  the  borrower,  before  he 
can  procure  one  cent  of  money  is  obliged  to  pay  the  agent  of 
this  bank  for  examining  all  the  title  papers  of  his  land  that 
is  to  be  mortgaged,  to  pay  for  the  execution  and  recording  of 
a  mortgage  deed;  to  lose  time  in  effecting  the  loan,  so  that  it 
will  cost  him  from  10  to  15%  the  first  year  besides  the  interest; 
and  immediately  upon  receiving  the  loan  the  borrower  has  to 
advance,  for  the  first  six  months'  interest,  at  the  rate  of  7% 
per  annum.  At  the  end  of  every  six  months  prompt  payment 
is  demanded,  and  if  it  should  not  be  made  at  the  day,  yes,  at 
the  hour,  it  becomes  due,  the  company  can  foreclose  the 
mortgage,  force  a  sale,  and  thus  at  one  stroke  sweep  from  a 
man  his  farm  for  the  paltry  sum  of  $100  or  $2oo."91 


88  Cincinnati  in  1841  —  Charles  Cist,  p.  50.     In  1841,  M.  T.  Williams 
was  President,  J.  M.  Perkins,  Cashier,  and  the  Board  of  Trustees  were 
from  Cincinnati,  Warren,  Gallipolis,  Columbus,  Cadiz,  and  Dayton,  Ohio, 
and  also  New  York,  Boston,  Philadelphia,  and  New  Orleans. 

89  Niles,  49  :91,  Oct.  10,  1835. 

90  Besides  issuing  its  own  notes,  this  company  borrowed  money  all 
\    over  the  country  at  3  to  4%  interest,  and  then  upon  this  capital  it  dis- 
counted at  7%  payable  in  advance.  —  Ohio  Monitor,  May  13,  1846. 

91  Ohio  Monitor,   (Columbus),  Aug.  12,  1835. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.     143 

The  wide  distribution  of  the  operations  of  this  company 
is  illustrated  by  the  fact  that  in  January  1836,  it  had  loans  se- 
cured by  real  estate  in  at  least  67  counties  in  the  state,  the 
amounts  loaned  in  each  county  varying  from  a  few  hundred 
dollars  to  half  a  million.  The  total  amounted  to  $1,858,099  and  ' 
was  secured  by  pledges  of  real  estate  to  the  estimated  value 
of  $4,338,117.^' 

The  report  of  the  master  commissioner  on  this  company 
in  1836  speaks  of  the  ability  and  integrity  with  which  its  affairs 
were  conducted,  of  the  prudence,  safety,  and  productiveness  of 
its  investments,  and  of  the  safety  of  those  holding  its  invest- 
ments.93 Nevertheless  there  was  a  bill  before  the  legislature 
that  year  to  repeal  its  charter.  This  bill  had  the  support  of 
most  of  the  Democratic  papers  in  the  state,  though  some  of 
them  favored  the  bank.9* 

The  Ohio  Monitor  of  March  14,  1836  gives  a  list  of  the 
stockholders  of  the  Ohio  Life  Insurance  and  Trust  Co.,  with 
the  number  of  shares  and  amount  of  stock  held  by  each,  and 
comments  regarding  the  stock  thus :  "Most  of  which,  as  may 
be  discovered,  is  owned  by  the  Wall  Street  gentry  of  New  / 
York."  This  paper  also  names  the  20  trustees  of  .the  company, 
adding:  "Three  only,  we  believe,  are  citizens  of  Ohio  and 
professing  to  belong  to  the  democratic  party."  When  the  bill 
to  repeal  the  charter  of  the  company  came  to  a  vote  in  the 
legislature,  however,  it  was  postponed  indefinitely  by  a  vote 
of  40  to  27.95 

Revival  of  Miami  Exporting  Co.  and  Urbana  Banking  Co. 

—  After  the  ten  banks  chartered  by  the  Ohio  legislature  in 
February  and  March  1834,  no  more  were  chartered  that  year; 
but  the  Urbana  Banking  Co.,  which  had  failed  some  time 
before  1830,  was  again  doing  business  early  in  i834,96  and  the 


w  Ohio  Monitor,  Jan.  18,  1836.     For  amount  loaned  in  each  county 
see  Appendix,  p.  266. 

93  Ohio  Executive  Document,  1836,  No.  1. 

94  Ohio   Monitor,    (Columbus),   Feb.  25  and  29,  and  Mar.  10,   1836. 

95  Ohio  Monitor,    (Columbus),  Mar.  14,  1836. 

98  Ohio  Senate  Journal,  1834,  p.  638.    See  also  Chapter  V,  p.  132. 


144  Ohio  Arch,  and  Hist.  Society  Publications. 

Miami  Exporting  Co.,  which  had  been  compelled  to  close  its 
doors  in  I&22,97  was  revived  and  again  put  into  operation  during 
the  year.98 

In  his  message  of  December  2,  1834,  Governor  Lucas  stated 
that  $1,250,000  had  already  been  paid  in  on  the  capital  stock 
of  eight  of  the  banks  incorporated  at  the  previous  session  of  the 
legislature ;  and  in  commenting  on  this  he  added :  "The  readiness 
with  which  the  stocks  in  those  banks  has  been  taken  is  a  cheer- 
ing evidence  of  the  existence  of  capital  in  the  State."99 

Number  and  Capital  of  Ohio  Banks  in  March  1835.  —  At 

the  next  session  of  the  legislature  a  great  many  petitions  for 
new  banks  were  presented,100  but  the  legislature  refused  to 
grant  a  single  charter.101  At  that  time,  however,  there  were 
twenty-seven  authorized  banks  in  operation  in  the  state  and 
their  condition  was  generally  considered  quite  sound.102  These 
consisted  of  ten  of  the  eleven  old  banks  remaining  in  i83O,103 
the  thirteen  new  ones  chartered  from  1831  to  1834,  and  four 
others  chartered  prior  to  1830,  but  which  had  been  either  re- 
vived after  failing  once,  or  encouraged  to  issue  their  capital 
stock,  which  had  previously  remained  unsubscribed. 

The  main  facts  as  to  their  financial  condition  may  be  seen 
from  the  following  items  from  reports  made  by  them  to  the 
state  auditor  in  January  1835. 


""See  Chapter  I,  p  32,  and  Chapter  V,  p.  118. 
98  Ohio  House  Journal,  1837,  p.  139. 
"Ohio  House  Journal,  1835,  p.  16. 

100  Ohio  Executive  Document,  1844,  No.  1,  p.  17. 

101  Niles,  48 :145,  May  2,  1835. 

102  Dayton  Journal,  Mar.  10,  1835. 

Ohio  Senate  Journal,  1835,  p.  202.     (Minority  Report  of  Committee 
on  Finances,  Jan.  7,  1835). 

103  See  Chapter  V,  p.  121.     The  Bank  of  Steubenville  had  dropped 
out  in  the  meantime. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War     145 

STATISTICS    OF   OHIO    BANKS,    MARCH     1835. 

Authorized  capital  stock $12,200,000 

Capital  stock  paid  in 5,847,525 

Specie    2,489,912 

Discounts     6,799,247 

Total  circulation    4,564,898 

Circulation    under    $5 1,128,577 

Circulation  over  $5 3,382,321 

i 

From  the  foregoing  it  appears  that  the  entire  circulation 
of  the  chartered  banks  in  Ohio  at  that  time  was  considerably 
less  than  their  paid  in  capital,  while  they  had  on  hand  more 
than  one  dollar  of  specie  for  every  two  dollars  in  circulation, 
which  indicates  a  very  good  condition.  This  conclusion  is 
strengthened  by  a  report  of  the  committee  on  finances  made  to 
the  Ohio  Senate  January  7,  1835,  which  says:  "The  banks  of 
Ohio  are  sound  and  conducted  with  prudence  and  security  to 
the  public,  nor  is  there  a  suggestion  of  inability  or  want  of 
disposition  to  fulfill  their  engagements."104 

Details  of  Ohio  Banking  Statistics  in  1835.  —  The  avail- 
able banking  statistics  of  the  time,  however,  are  so  scattering 
that  it  is  difficult  to  draw  definite  conclusions.  For  example, 
the  Ohio  State  Auditor's  report  of  January  30,  1835  on  tne 
condition  of  the  Ohio  banks  gives  reports  for  only  sixteen 
banks,105  whereas  there  were  nearly  twice  that  many  in  the ' 
state.  A  statement  in  relation  to  state  banks  transmitted  to 
the  United  States  House  of  Representatives  by  Secretary  of 
the  Treasury,  Levi  Woodbury,  on  January  5,  1836  lists  thirty- 
one  local  banks  in  Ohio  in  1835. 106  The  statistics  of  fifteen  of 


104  Ohio  Senate  Journal,  1835,  p.  202. 

105  Ohio  Senate  Journal,  1835,  p.  523. 

A  part  but  not  all  of  the  banks  in  the  state  were  required  by  their 
charters  to  make  regular  reports  to  the  state  auditor.  —  See  Report  Aud. 
of  State,  Jan.  1836,  relative  condition  certain  banks. 

100  H.  R.  Doc.  No.  42,  24th  Cong.,  1st  Session,  pp.  78  and  79. 

See  also  "A  Hist,  of  the  State  of  Ohio"  —  Atwater,   (1838),  p.  315. 

10 


146  Ohio  Arch,  and  Hist.  Society  Publications. 

them,  evidently  taken  from  the  state  auditor's  report  mentioned 
above,  are  given  pretty  fully  for  January  1835 ;  the  next  three 
are  also  fairly  complete,  but  for  May  1835;  then  follow  six  as 
of  November  1835  with  pretty  complete  statistics;  three  as  of 
January  1835,  with  figures  for  loans,  specie,  capital,  and  cir- 
culation ;  and  2  as  of  January  1835  with  figures  only  for  specie 
capital  and  circulation;  while  the  last  two  are  named  without 
giving  any  statistics. 

The  first  twenty-four  banks  named  show  the  following 
totals. 

CONDITION   OF   TWENTY-FOUR   OHIO    BANKS    IN    1835. 

Stocks $2,50000 

Loans  and  Discounts 9,751,973  20 

Real   Estate    108,501  31 

Due  from  Banks 1,433,836  93 

v       Bank  Notes   1,272,268  53 

Specie    1,707,835  95 

Other  Investments    44,531  37 

Capital 5,819,692  28 

Deposits    2,090,065  65 

Due  to  Banks 667,942  50 

Circulation    5,221 ,520  80 

Other  Liabilities   213,713  94 

Proportion  of  Specie  to  Circulation.  —  The  foregoing- 
figures  show  a  proportion  of  specie  to  circulation  of  nearly 
one-third.  The  proportion  shown  by  nineteen  banks  reporting 
in  January  was  30%  ;  the  three  reporting  in  May  showed  45%, 
and  the  six  reporting  in  November  35%  ;  while  the  twenty-eight 
banks  for  which  figures  of  specie  and  circulation  were  given 
show  that  they  had  specie  on  hand  equal  to  fully  a  third  of  their 
circulation. 

The  amount  of  loans,  specie,  capital,  and  circulation  shown 
for  each  bank,  together  with  the  totals,  are  given  in  the  follow- 
ing table,  the  cents,  however,  being  omitted. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    147 

STATISTICS   OF   CHARTERED   BANKS   IN   OHIO   IN    1835. 107 


Name     of     Bank.108 

k 

Q 

T3 
84 

& 
^ 

o> 
o 
u 
n 
to 

"c3 

'$. 

rt 
U 

Circulation. 

1 

Lancaster      Ohio,     Bank  

$556  394 

$79  415 

$184  700 

$357  529 

2 

Dayton     Bank 

242  719 

92  250 

102  640 

214  125 

8 

Farmer's    Bank    of    Canton..   . 

169  691 

51*973 

70  000 

207  091 

4. 
5. 
6 

Belmont    Bank   of   St.    Clairsville.  .  .  . 
Commercial    Bank    of    Lake    Erie  
Urbana    Banking    Company  

275,065 
507,770 
141,478 

44,401 
51,599 
30,309 

155,550 
249,344 
50  241 

197,978 
304,745 
136,402 

7 

Bank     of     Sandusky  

36  885 

18  042 

50  000 

34  000 

6 

Western    Reserve    Bank  

232,115 

50,816 

144  057 

149,175 

q 

Chillicothe    Bank    

518  167 

85  129 

350  300 

362  782 

10 

Bank     of     Muskingum 

125  832 

30  465 

110  650 

141  372 

11 

Bank    of    Marietta  

126  322 

17  018 

71  750 

82  451 

12. 

1R 

Commercial    Bank    of    Scioto  
Bank    of    Mt.    Pleasant  

123,687 
299  520 

17,316 
38  919 

92,892 
187  384 

78,648 
137  037 

14 

Franklin    Bank    of    Columbus  

567,942 

152  745 

434  425 

345  376 

15. 
Ki. 
17. 
IS. 
19 

F.    &  M.    Bank,    Steubenville  
Commercial    Bank    of    Cincinnati  
Franklin    Bank    of    Cincinnati  
Clinton    Bank    of    Columbus  
Bank    of    Zanesville  

260,334 
1,481,465 
1,622,234 
367,614 
264  247 

61,818 
141,849 
175,152 
82,605 
40  326 

117,319 

1,000,000 
1,000,000 
155,000 
146  510 

229,576 
285,817 
372,514 
198,336 
193  505 

20 

Bank    of    Circleville  

388,873 

60  352 

200  000 

243  000 

''1 

Bank     of     Norwalk  

275  239 

31  522 

132  521 

222  120 

9-> 

Bank    of   Xenia 

124  638 

65  '603 

74  040 

105  000 

28 

Ohio  Life   &  Trust  Co     ... 

898  707 

2'59  588 

675  367 

536  390 

"4 

Bank    of    Hamilton  

145  027 

28  613 

65  000 

86  550 

26 

Bank     of     Cleveland  

73  660 

50  056 

102  000 

76  998 

26 

Bank    of    Massillon  

155  180 

71  345 

100  000 

176  048 

87 

Bank    of    Wooster  

90  435 

48  118 

•  62  048 

98  941 

28 

Bank   of  Geauga  

39  359 

57  000 

80  541 

29 

Lafayette    Bank   of    Cincinnati 

250  000 

Total     

$10  071  250 

$1  916  715 

$6  390  741 

$5  654  048 

House  Document,  No.  42',  24th  Cong.,  1st  Sess.  pp.  82  and  83.    Jan.  1836. 
08  Two    other    banks    named    but    without    figures:    The    Columbiana    Bank    of 
New  Lisbon  and  the  Miami  Exporting  Company  of  Cincinnati. 

Distribution  of  Chartered  Banks  by  Counties  and  Ratio  of 
Capital  to  Population  in  1835.  —  The  31  chartered  banks  in 
Ohio  in  1835  were  located  in  twenty-two  counties  whereas  only 
nine  counties  had  authorized  banks  in  1830.  The  relation  of 
paid  in  capital  stock  to  population  for  the  whole  state  in  1835 
was  about  $5.50  to  each  person,  while  in  1819  it  was  approxi- 
mately $4.00,  and  in  1830  only  a  little  over  $i.5O.109 

The  distribution  of  the  authorized  banks  by  counties  in 
1835,  the  estimated  population  of  each  county  in  which  a  bank 
was  located,  the  total  capital  stock  of  the  banks  in  each  county, 
and  the  amount  per  capita  in  each  county  are  shown  in  the  fol- 
lowing table. 

109  See  Chapter  III,  p.  79,  and  Chapter  V,  p.  121. 


148 


Ohio  Arch,  and  Hist.  Society  Publications. 


DISTRIBUTION   OF   BANKS   AND   CAPITAL   IN   OHIO   IN    1835. 


1 

1 
nj 
en 

Capital 

Stock. 

Name  of  Bank.114 

County. 

c 

c 
o 

15 
13 

CX, 

£ 

Number  of  ' 

_c 

T3 

2 

3 

rt 

3 

& 

Belmont  Bank  of  St.  Clairs- 
ville       

Belmont 

29  764 

1 

$155  550 

$5  226 

Bank    of    Hamilton  

Butler    

27  668 

1 

65  000 

2  350 

Urbana    Banking   Company.. 

Champaign 

14  376 

\ 

50  249 

3  495 

Columbiana    Bank    of    New 
Lisbon    

37  985 

1 

11190  000 

2  369 

Commercial    Bank    of    Lake 
Erie   

5-Cuyahoga 

18  440 

4 

249  344 

1  19  053 

1 

102  000 

Bank   of  Sandusky  

Erie        .. 

11012  599 

1 

50  000 

3  969 

Lancaster  ,    Ohio     Bank  

Fairfield    

28,355 

1 

184,700 

6.514 

Franklin   Bank  of  Columbus. 

1  Franklin 

19  895 

2  f 

434  425 

1  29  627 

Clinton  Bank  of  Columbus.. 
Bank  of  Xenia  
Commercial     Bank    of    Cin- 
cinnati     

Greene    

16,165 

,{ 

155,000 
74,040 

1  000  000 

4.580 

Franklin  Bank  of  Cincinnati 
Ohio  Life  &  Trust  Co.,  Cin- 
cinnati     

Hamilton    

66,231 

5' 

1,000,000 
675  367 

48  655 

Lafayette  Bank  of  Cincinnati. 
Miami    Exporting   Co.,    Cin- 
cinnati     

250,000 
112297  085 

Bank   of   Norwalk  

Huron    

18,637 

1 

132  521 

7  111 

Bank  of  Mt.  Pleasant  
Farmers'  &  Mechanics'  Bank 

/-  Jefferson    

23,760 

4 

187,384 

Ll2.824 

of    Steubenville    
Bank     of     Geauga,     Paines- 
ville   

Lake          .          ... 

11013,719 

{ 

i 

117,320 
57  000 

4  155 

Dayton  Bank 

28  150 

i 

102  640 

3  646 

Bank    of    Muskingum,    Put- 
nam   .... 

34  042 

J 

110  650 

}7  554 

Bank  of  Zanesville  .. 

I 

146  511 

Bank    of    Circleville  

Pickaway    

17,863 

i  L 

200  000 

11.196 

Bank   of  Chillicothe    .  . 

Ross              

25  764 

i 

350  300 

13  596 

Commercial  Bank  of  Scioto, 
Portsmouth    

9  966 

i 

92  892 

9  321 

Farmers'  Bank  of  Canton 

Stark 

30  569 

2  f 

70  000 

)    5  561 

Bank   of   Massillon  .., 
Western    Reserve   Bank  
Bank   of   Marietta  

Trumbull    
Washington     

32,130 
16  277 

,{ 

1 

100,000 
144,058 
71  750 

4.484 
4  408 

Bank    of    Wooster 

29  571 

1 

62  049 

2  098 

Total   for  22   counties 

551  926 

31 

$6  777  828 

$12  280 

Total     for     State     (78 
counties) 

1  228  685 

31 

6  777  828 

5  516 

15  The  population  figures  here  given  were  obtained  by  adding  to  the  population 
of  the  various  counties  in  1830  one-half  the  gain  as  shown  by  the  census  figures 
of  1840. 

9  Population  in  1840.     County  not  organized  in  1830. 

114  List  of  banks  and  capital  as  given  in  Secretary  of  the  Treasury,  Levi  Wood- 
bury's  statement  in  relation  to  State  Banks  and  Banking  Companies,  transmitted  Jan. 
5,  1836.  H.  R.  Doc.  No.  42.  24th  Cong.,  1st  Sess.  Pages  78  to  83. 

111  Amount  given  in  the  report  of  the  Ohio  Bank  Commissioners  of  Dec.  17,  1842, 
page  32. 

112  Amount  given  in  Gouge's  Journal   of  Banking,   June  22,   1842,   page  403. 

113  Computed   by   dividing  the  banking   capital   in   each   county  by   the   population 
of  the  county  in  1835. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War     149 

Climax  of  the  Inflation  in  1836.  —  In  1836  the  second 
period  of  bank  note  inflation  in  Ohio  reached  its  climax,  the 
circulation  of  the  authorized  banks  in  the  state,  as  reported  to 
the  United  States  Treasury,  amounting  to  $9,675,644,  a  point 
not  attained  again  until  i85O.116  This  was  an  increase  of  more  * 
than  70%  over  the  circulation  in  1835.  The  loans  and  discounts 
in  1836  also  showed  an  increase  of  nearly  70%  over  those  of 
1835,  the  amount  reported  in  1836  being  $I7,O79,7I4.117 

The  "No  Bank"  Party  in  Power.  —  These  gains  were 
made  by  extending  the  operations  of  the  existing  banks  rather 
than  by  increasing  the  number  of  banks,  only  one  new  bank 
being  organized  in  the  state  in  1836,  which  brought  the  number 
of  Ohio  banks  up  to  thirty-two.118 

That  no  more  banks  were  chartered  at  this  time,  when  all 
over  the  country  the  demand  for  more  banking  facilities  was 
at  its  height,  was  largely  due  to  the  fact  that  the  hard  money 
wing  of  the  Democratic  party  was  gaining  power  in  the  state 
legislature.  This  faction,  known  as  the  "no  bank"  party  and 
just  coining  to  be  called  "Loco  focos",  were  inclined  to  believe 
with  Jackson  that  gold  and  silver  were  the  "true  constitutional 
currency"  of  the  country,  and  to  look  askance  upon  the  rapid 
increase  of  banks  and  paper  money.119 

Report  of  Legislative  Committee  against  chartering  more 
Banks.  —  The  legislature  in  1835  had  refused  to  charter  any 
banks,120  the  House  committee  on  banking  in  reporting  February 
13  against  the  incorporation  of  a  bank  at  Youngstown,  de- 


116  Report  of  U.  S.  Comptroller  of  the  Currency,  1876,  p.  CXVI. 
See  also  Appendix,  p.  283. 

117  Ibid.    Also  Hist,  of  Ohio  —  Atwater,  p.  315. 
For  figures  of  1835  see  preceding,  p.  147. 

18  The  Bank  of  Manhattan  was  organized  at  Toledo,  Ohio,  Mar.  25, 

1836.  —  History  of  Banking  —  Knox,  p.  677. 

This  bank  had  originally  been  incorporated  under  the  laws  of  the 
Territory  of  Michigan,  when  jurisdiction  was  claimed  by  the  latter.  That 
jurisdiction  was  withdrawn  before  the  bank  began  business.  Michigan 
commenced  court  proceedings.  The  bank  was  closed  by  mandamus  July 
29,  1840.  —  Special  rept.  bank  com'rs,  1842,  p.  39.  Laws  of  Ohio,  37  :212. 

119  Division  and  Reunion  —  Wilson,  pp.  90  and  95. 

120Niles,  48:145.     May  2,  1835. 


150  Ohio  Arch,  and  Hist.  Society  Publications. 

daring  that  it  was  questionable  whether  the  citizens  of  the 
state  favored  the  establishing  of  any  more  banks.121  A  similar 
v  legislative  committee  in  1836,  considered  petitions  to  establish 
'  banks  at  thirty-four  places,  reported  that  while  a  large  pro- 
portion of  the  existing  banks  were  enabled  by  their  charters 
to  extend  their  capital  to  $500,000  very  few  had  done  so,  some 
employing  less  than  half  that  amount.  The  committee,  observ- 
ing that  it  seemed  therefore  that  an  increase  of  banking  capital 
was  not  required,  and  adding  that  the  produce  of  the  state  and 
all  kinds  of  property  were  very  high  in  value  while  the  price 
of  labor  remained  nearly  as  it  was,  concluded  by  recommending 
that  no  further  banking  privileges  should  be  granted  that 
session.122 

United  States  Treasury  Department  urges  States  to  sup- 
press Small  Bank  Notes.  —  Closely  related  to  this  belief  that 
the  expansion  of  bank  paper  should  not  proceed  too  far  at  the 
expense  of  the  metallic  circulation  was  the  passage  of  a  law  by 
the  Ohio  legislature  on  March  14,  1836,  prohibiting  the  cir- 
culation of  small  bills. 

The  chief  objections  to  small  notes  were:  first,  that  they 
were  more  likely  than  larger  notes  to  be  issued  and  kept  out 
in  excess  since  they  were  very  imperfectly  convertible  into  coin, 
the  holders  being  from  poverty,  ignorance,  or  distance  so  often 
unable  to  present  them  promptly  at  the  proper  place  for  re- 
demption; and  second,  that  they  tended  to  drive  out  the  specie 
from  the  districts  where  they  passed  current,  thus  increasing 
the  amount  of  paper  the  bank  might  be  called  upon  to  redeem, 
and,  at  the  same  time,  decreasing  the  amount  of  specie  in  the 
community  which  the  bank  might  get  in  to  use  in  redeeming 


m  Ohio  House  Journal,  1835,  p.  714. 

The  statement  was  made  in  this  report  that  there  was  already  a 
bank  in  Trumbull  County  with  ah  authorized  capital  of  $500,000. 

122  Ohio  House  Journal,  1836,  p.  522.  See  also  Ohio  Monitor,  Jan. 
21,  1836. 

From  the  table  given  above  on  page  145  it  may  be  seen  that  in  1835, 
the  27  banks,  with  an  authorized  capital  of  $12,200,000  had  paid  in  capital 
of  only  |5,847,525. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War     151 

its  notes.  In  short  the  small  notes  militated  against  convert- 
ibility and  tended  to  produce  excess.123 

In  his  report  on  the  currency  February  24,  1820,  Secretary 
of  the  Treasury  Wm.  H.  Crawford  had  advocated  restraining 
banks  from  issuing  notes  of  small  denominations,  as  one  means 
of  preventing  fluctuations  in  the  currency.  And  Albert  Gallatin 
in  1831  urged  the  states  to  suppress  small  notes  as  a  means  of 
enlarging  the  circulating  metallic  currency,  pointing  out  that 
as  a  currency  small  notes  were  exclusively  local,  and  that  in 
case  of  any  bank  failure  the  loss  arising  from  them  fell  most 
heavily  on  the  poorer  class  of  the  community,  since  they  were 
most  likely  to  be  the  holders  of  the  small  notes.124  During 
most  of  the  3o's  the  United  States  Treasury  Department  kept 
urging  the  states  to  exclude  the  small  bank  notes  from  circula- 
tion so  as  to  enlarge  the  quantity  of  specie  in  the  country  and 
increase  the  use  of  it.125 

Governor  Lucas  recommends  Prohibition  of  Bills  less  than 
$5.  —  In  October  1834  the  Albany  Argus  stated  that  New  York 
was  about  to  prohibit  the  issue  of  all  bills  under  $5-126  The 
same  thing  was  urged  upon  other  states  by  Governor  Marcy 
of  New  York.  A  letter  of  his  on  the  subject  was  transmitted 
to  the  Ohio  legislature  by  Governor  Lucas  in  his  message  of 
December  2,  1834,  which  recommended  favorable  action.127 

Committee  of  Ohio  Legislature  reports  Right  to  issue 
Small  Bills  a  Vested  Right  granted  in  Bank  Charters.  —  The 
legislature  at  once  referred  the  subject  to  a  joint  committee  of 
both  houses,128  which  reported  a  fortnight  later,  December  23, 
that  while  there  probably  was  an  alarming  disproportion  between 


3  See  Money,  Trade,  and  Industry  —  Walker,  pp.  303-305. 

The  point  was  also  made  that  the  small  notes  were  largely  held  by 
the  very  class  most  likely  to  be  the  first  subjects  of  a  panic. 

124  Considerations  on  the  Currency  —  Gallatin,  p.  57. 

On  January  31,  1831,  the  Ohio  legislature  passed  an  act  to  prohibit 
within  the  state  the  circulation  of  foreign  bank  bills  less  than  $5.  — 
of  Ohio,  XXIX,   (1831),  p.  460. 

126  Reports  on  Finance,  1837-44,  p.  252. 
128  Niles,  47 :129,  Nov.  1,  1834. 

127  Ohio  House  Journal,  1835,  p.  16. 

128  Niles,  47  :293,  Jan.  3,  1835. 


152  Ohio  Arch,  and  Hist.  Society  Publications. 

the  quantity  of  specie  and  notes  in  New  York,  the  same  was  not 
true  in  Ohio.  Yet,  they  added,  other  reasons  of  convenience 
and  expediency  would  lead  them  to  favor  the  suppression  of 
notes  less  than  $5,  if  the  legislature  had  not  granted  the  rights 
in  the  charters  of  the  banks ;  but,  these  rights  thus  being  vested 
rights,  direct  legislation  was  not  practicable,  though  indirectly 
the  legislature  might  discredit  such  small  notes  by  prohibiting 
the  state  and  county  treasurers  from  receiving  for  taxes  notes 
less  than  $5  or  of  any  denomination  issued  by  an  Ohio  bank 
unless  it  should  before  July  4,  1835  notify  the  auditor  that  it 
would  cease  to  issue  notes  less  than  $5  and  surrender  the 
privilege.129 

Extent  of  Circulation  of  Small  Bills.  —  Niles,  comment- 
ing on  the  measure  in  his  Weekly  Register  of  January  3,  1835, 
\  expressed  the  opinion  that  very  few  bills  of  Ohio  banks  less 
than  $5  were  circulating  in  Ohio,  hence  that  if  small  notes  were 
suppressed  there,  the  effect  would  chiefly  be  on  those  of  New 
York  which  abounded  in  Ohio.130 

A  report  of  the  Ohio  state  auditor,  January  19,  1835,  on 
the  extent  of  the  circulation  of  small  bills,  gave  returns  of 
twenty-two  banks  as  follows:  of  $i  bills  outstanding,  $17,067;  of 
$2  bills,  $97,928;  of  $3  bills,  $313,449;  while  the  total  amount 
in  circulation  was  $i,o52,729.58.131  At  that  time  it  was  said 
in  the  New  England  States,  New  York,  and  New  Jersey  the 
amount  of  bills  less  than  $5  was  equal  to  nearly  half  the  aggre- 
gate of  all  bills  issued  in  those  states,  and  that  the  amount  of 
them  issued  in  those  states  alone  equaled  8/9  of  the  specie  in 
all  the  state  banks  in  the  country.132 

Niles'  Register  of  April  4,  1835  reported  that  New  Jersey 
and  Maine  had  both  passed  bills  prohibiting  notes  less  than  $5 ; 
and  that  Pennsylvania,  Maryland,  Virginia,  and  several  other 
states  were  all  without  a  circulation  of  bank  notes  less  than 
$5.133  The  Ohio  legislature,  however,  apparently  did  not  think 


129  Ohio  Senate  Journal,  1835,  p.  128. 

130  Niles,  47:293. 

131  Ohio  Senate  Journal,  1835,  p.  432. 

132  Niles,  48 :430,  Aug.  15,  1835. 

133  Niles,  48  :73. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    153 

conditions  in  the   state  warranted   legislation  at  that  time  and 
the     matter  was  allowed  to  go  over  until  the  next  session. 

The  Banks  requested  by  the  Legislature  to  surrender  their 
Rights  to  issue  Small  Notes.  —  Promptly  upon  the  beginning 
of  the  following  session  in  December  1835,  however,  the  senate 
adopted  a  resolution  instructing  the  state  auditor  to  request  the 
local  banks,  which  were  not  bound  by  their  charters  to  do  so, 
to  report  to  the  legislature,  among  other  things,  the  amount  of 
notes  on  hand  of  denominations  less  than  $5  and  to  state 
whether  they  were  "willing  to  surrender  so  much  of  their 
charters  as  authorized  the  issuing  of  bills  of  a  less  denomina- 
tion than  five  dollars."134 

Replies  of  the  Banks.  —  The  banks  were  to  report  by 
January  20,  if  convenient.  Several,  namely,  the  banks  of  Xenia, 
Massillon,  Hamilton,  and  New  Lisbon,  together  with  the  La- 
fayette Bank  of  Cincinnati  sent  in  no  answer  to  the  last  ques- 
tion. Three  expressed  unwillingness  to  comply  uncondition- 
ally.135 Five  absolutely  declined.136  The  directors  of  a  number 
said  that  they  had  no  power  to  surrender  any  of  their  franchise 
without  the  consent  of  their  stockholders.  The  Bank  of  Nor- 
walk,  on  January  i,  1836,  replied:  "The  following  facts  are 
within  the  knowledge  of  the  officers  of  this  institution.  That 
notwithstanding  the  law  of  this  state  prohibiting  the  circulation 
of  small  notes  of  foreign  banks  they  continue  to  compose  a 
considerable  portion  of  our  currency;  that  loans  of  such  notes^ 
have  been  made  by  Eastern  banks  for  use  here;  that  the  at- 
tempts in  Eastern  States  to  suppress  them  have  not  been  suc- 
cessful; that  loans  of  large  amounts  of  small  notes  have  been 
made  by  the  banks  in  Ohio  to  be  used  in  Eastern  States,  where 
their  circulation  is  prohibited ;  and  that  such  notes  have  obtained 
an  extensive  circulation  from  the  presumed  necessity  of  such 
a  currency  to  supply  the  ordinary  demands  of  business."137 


^Report  of  State  Auditor,  January,  1836. 

35  The  Franklin  Bank  of  Cincinnati,  the  Commercial  Bank  of  Cin- 
cinnati, and  the  Dayton  Bank. 

136  The  Banks  of   Geauga,   Norwalk,   Steubenville,   Marietta,    Scioto, 
and  St.  Clairsville. 

137  Ohio  State  Auditor's  Report,  January,  1836,  p.  13. 


154  Ohio  Arch,  and  Hist.  Society  Publications. 

The  Farmers'  and  Mechanics'  Bank  of  Steubenville,  on 
January  6,  replied  favorably  but  thought  the  withdrawal  of  the 
small  notes  ought  not  to  be  sudden.138  The  Franklin  Bank  of 
Columbus  stated  that  it  feared  the  sudden  withdrawal  of  such 
notes  "would  produce  not  only  inconvenience,  but  much  public 
distress.  To  supply  their  place  in  the  circulation  would,  neces- 
sarily, require  nearly  one-fourth  of  the  specie  now  in  the  banks, 
and  a  curtailment  of  discounts  must  follow,  in  the  prudent  ex- 
ercise of  banking  to  double  that  amount.  The  consequence  must 
be  a  very  general  derangement  in  the  business  of  the  State.  It 
is  also  apprehended  that  reluctance  will  be  felt  to  pay  large  pro- 
portions of  specie  in  exchange  for  the  notes  of  distant  banks, 
and  that  consequently  a  pernicious  system  of  artificial  deprecia- 
tion and  brokerage  will  be  generated."139 

The  Law  of  Mar.  14,  1836  prohibiting  the  Issue  and  Cir- 
culation of  Small  Notes  by  Ohio  Banks.  —  It  will  be  seen  from 
these  replies  that  the  Ohio  banks  did  not  display  any  violent 
enthusiasm  over  the  invitation  to  give  up  their  privilege  of  is- 
suing small  notes.  But  the  legislature  was  bent  on  accomplish- 
ing this  result,  and  since  direct  prohibition  appeared  a  violation 
of  vested  rights,  it  resolved  to  try  an  indirect  method  through 
the  taxing  power. 

By  charter  provisions  the  tax  on  the  Commercial  Bank  of 
Cincinnati  was  limited  to  4%  on  its  dividends  and  that  on  the 
Franklin  Bank  of  Cincinnati  to  5%.  All  of  the  other  banks  in 
the  state  paid  5%  on  their  dividends  under  the  tax  law  of 
Mar.  12',  1831 ;  but  none  of  them  was  exempt  from  further 
taxation  under  a  general  law.140  Consequently,  on  Mar.  14, 
1836,  the  legislature  passed  a  law  which  subjected  all  the  banks 
in  the  state,  except  the  two  named  above,  to  a  tax  of  20%  on 
their  annual  dividends,  unless  they  should  by  July  4,  1836  sur- 
render their  rights  to  issue  or  circulate  bills  less  than  $3  after 
July  4,  1836,  or  less  than  $5  after  July  4,  1837.  If  the  banks 
should  surrender  these  rights  then  the  tax  on  their  dividends 


188  Ibid.,  p.  14. 

"'State  Auditor's  Report,  January,   1836,  p.  20. 
140  See  case  of  Ohio  Life  Insurance  and  Trust  Company  vs.  Henry 
Debolt,  Treasurer  of  Hamilton  County  — 16  Howard  421. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    155 

was  to  remain  at  5%.  from  the  time  of  surrender.141  The  as- 
cendancy of  the  Diemocrats  in  the  legislature  at  that  time  is 
indicated  by  the  vote  on  this  measure.  The  law  passed  the 
Senate  by  a  vote  of  20  to  15,  all  the  affirmatives  being  Demo-~ 
crats  and  all  the  negatives  Whigs.  In  the  House  the  vote  was : 
for — 38,  all  Democrats;  against — 28,  all  Democrats  but  6.142 

Of  the  thirty-two  banks  in  Ohio  at  the  time  this  law  was 
passed,  all  but  five  surrendered  the  right  to  issue  small  bills.143 
From  the  high  point  of  $9,675,644  in  1836,  the  circulation  of  s 
the  Ohio  banks  declined  to  $8,326,974.80  in  January  i837.144 
That  this  decrease  in  circulation  was  due  largely  to  the  with- 
drawal of  small  notes  is  probable,  since  during  this  same  period 
the  capital  stock,  deposits,  loans,  and  specie  of  the  Ohio  banks 
each  increased,  while  in  the  country  as  a  whole  the  circulation 
of  the  banks  increased  by  over  9  million  dollars.  The  effect 
of  the  small  note  law  in  Ohio,  therefore,  seems  to  have  been 
to  bring  to  a  close  the  second  period  of  inflation  in  the  state. 


141  Ibid.,  p.  422.    Also  Laws  of  Ohio,  Vol.  XXXIV,  (1836),  p.  42. 

142  Ohio  Statesman,   (Columbus),  June  27,  1838. 
Ohio  House  Journal,  1836,  pp.  711  and  712. 

143  Ohio  Executive  Document,  1838,  No.  54.  —  Report  of  State  Au- 
ditor, Jan.  16,  1839. 

The  5  banks  that  neglected  or  refused  to  comply  were:  The  Ur- 
bana  Banking  Co.,  the  Bank  of  Circleville,  the  Miami  Exporting  Co.,  the 
Franklin  Bank  of  Cincinnati,  and  the  Commercial  Bank  of  Cincinnati. 

144  Ohio  Executive  Document,  1836,  No.  42. 


CHAPTER  VII. 

THE   PANIC   OF    1837   AND  THE  RESULTANT   PERIOD   OF  DEPRESSION. 

I837-43. 

The  National  Government  tries  to  check  Bank  Note  In- 
flation. —  The  prohibition  of  the  issue  and  circulation  of  small 
notes  in  Ohio  was  but  a  part  of  a  general  movement  at  that  time, 
a  great  many  of  the  states  being  induced  to  take  similar  meas- 
ures. Niles'  Register  of  October  i,  1836  names  thirteen  other 
states  that  had  already  prohibited  their  banks  from  issuing  any 
notes  under  $5.1  This  movement  was  largely  induced  by  the 
national  administration,  which  also  made  arrangements  with  the 
deposit  banks  that  they  should  not  issue  notes  of  less  than  $20, 
nor  of  an  amount  greater  than  three  times  their  specie.  This 
was  with  the  view  of  restricting  the  volume  of  bank  notes  and 
increasing  the  circulation  of  specie.  But,  as  President  Woodrow 
Wilson  says,  "no  small  expedients  could  stay  the  rising  tide  of 
bank  circulation,  could  provide  capital  to  uphold  that  circulation, 
or  assuage  the  fever  of  speculation  that  had  fallen  upon  the 
country."2  The  undue  extensions  of  credit  and  speculation  to- 
gether with  the  other  excesses  incident  to  the  rapid  expansion 
of  the  period  were  about  to  bear  fruit  in  panic  and  depression.3 

The  Specie  Circular.  —  The  inevitable  crash  was  pre- 
cipitated by  President  Jackson's  famous  specie  circular  of  July 
n,  1836.  The  remarkable  increase  in  public  land  sales  in  1835 
and  36,*  due  to  speculation  principally,  was  bringing  into  the 


1The  states  named  were:  New  York,  Pennsylvania,  Virginia, 
Georgia,  Louisiana,  Indiana,  Alabama,  New  Jersey,  Maryland,  North 
Carolina,  Tennessee,  Kentucky  and  Maine.  —  Niles'  Register,  51 :80. 

2  Division  and  Reunion,  p.  90. 

3  See  Chapter  VI,  pp.  126  and  127. 

4  These  receipts  in   1835  were  $14,757,600.75;   in   1836  they  rose  to 
$24,877,179.86,   exceeding   for   the   first  and  last  time  the   receipts    from 
customs. 

See  Appendix,  p.  265. 

Also  Dewey's  Financial  History,  p.  217. 

(156) 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    157 

Treasury  such  a  flood  of  depreciated  bank  paper,  that  the  Presi- 
dent, convinced  no  doubt  that  there  were  no  longer  any  specie- 
paying  banks,  decided  to  assure  the  Treasury  of  sound  money 
by  confining  the  land  receipts  to  gold  and  silver.  Accordingly  on 
July  n,  1836,  the  treasury  department  issued  what  is  known  as, 
the  "specie  circular",  which  directed  the  land  agents  thereafter 
to  accept  nothing  but  specie  in  payment  for  public  lands.5 

Relation  of  Bank  Note  Inflation  to  Public  Land  Sales.  — 

The  conspicuous  part  played  by  land  speculation  during  the  in- 
flation period  prior  to  1837,  and  its  close  connection  with  bank 
note  inflation  have  been  noted  in  the  preceding  chapter.6  The 
following  diagram  will  illustrate  how  closely  the  receipts  from 
public  land  sales  were  related  to  the  circulation  of  bank  notes. 

General  Suspension  of  Specie  Payment.  —  The  check  put 
upon  land  speculation  by  the  issue  of  the  specie  circular  is  in- 
dicated by  the  sudden  drop  in  public  land  sale  receipts  from 
nearly  twenty-five  million  dollars  in  1836  to  less  than  seven 
millions  in  i837.7  This  of  course  seriously  affected  most  of  the 
western  banks,  and  through  them  many  of  those  in  the  East. 
The  difficulty  was  increased  by  the  credit  entanglements  of  the 
banks  due  to  the  distribution  of  the  surplus,  which  began  in 
January,  i837.8  About  the  same  time  financial  troubles  in  Eng- 
land occurred  and  English  creditors  began  to  call  in  their  loans, 
many  of  which  had  been  made  in  this  country.9  This,  together 
with  an  adverse  balance  of  trade,  caused  a  heavy  drain  for  coin 
upon  the  banks  in  the  seaboard  cities  with  the  result  that,  on 
May  10,  1837,  the  New  York  banks  suspended  specie  payment.10 
The  banks  in  the  large  northern  cities  followed  the  next  day  and 
those  in  all  the  rest  of  the  country  as  soon  as  the  news  reached 
them.11 


6  Division  and  Reunion  —  Wilson,  p.  91. 
"See  pp.  127,  129,  130. 

7  See  Appendix,  p.  265. 
"See  Chapter  VI,  pp.  128-9. 
'See  Chapter  VI,  p.  125. 

10  Men  and  Measures  of  Half  a  Century  —  McCulloch,  p.  59. 

11  Ibid.,  Also  Dewey's  Financial  History,  p.  230. 


158  Ohio  Arch,  and  Hist.  Society  Publications. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    159 

The  panic  of  1837.  —  The  panic  which  had  thus  overtaken 
the  country  was  intensified  by  American  crop  failures  in  1837 
and  1838  and  a  period  of  depression  followed,  which  lasted  until 
the  summer  of  1843. 12  "Commercial  distress  was  deep-seated 
and  recovery  was  slow;  not  until  the  latter  half  of  1838  did 
banks  generally  resume  specie  payments ;  even  then  some  of  the 
banks  were  unable  to  live  up  to  their  professions, — the  banks 
of  Philadelphia  for  example  suspended  again  October  9, 
1839,  and  did  not  resume  effectively  until  March,  1842;  in  this 
vacillating  and  discouraging  policy  they  were  followed  by  many 
others,  particularly  in  Rhode  Island,  New  Jersey,  and  the  South 
and  West."13 

Causes  of  Suspension  of  Ohio  Banks.  —  The  Ohio  banks 
were  no  exception  to  the  general  suspension  that  took  place  in 
May,  1837.  The  causes  which  led  to  their  suspension  were 
stated  by  the  Ohio  banks  to  have  been  the  previous  suspension 
of  all  the  eastern,  northern,  and  southern  banks  and  the  con- 
sequent impossibility  of  converting  their  resources  into  coin.14 
They  held  that  a  continuance  of  specie  payments  under  such  con- 
ditions would  have  subjected  them  to  heavy  and  constant  drafts 
on  their  coin,  and  that,  too,  by  banks  of  other  states  which  had 
closed  their  doors  to  that  mode  of  payment.  They  also  men- 
tioned, as  a  contributory  factor,  the  refusal  of  the  land  offices 
to  take  bank  paper  in  payment  for  public  lands.15 

The  suspension  by  the  Ohio  banks  was  nearly  simultaneous, 
and  without  concert,  showing  that  similar  views  and  similar 
feelings  influenced  them  to  the  course  they  took.16  They  were 
generally  considered  to  be  in  a  sound  condition  at  the  time,  and 
by  general  consent  continued  the  gradual  reduction  of  their  cir- 
culation which  they  had  begun  in  i836.17 


12  Crises  and  Depressions  —  Burton,  p.  282. 

"Financial  History  of  the  U.  S.  —  Dewey,  p.  232. 

"Ohio  Exec.  Doc.,  1837-8,  No.  30.  —  Auditor's  Rep't,  Jan.  27,  1838. 

It  should  be  noted  in  this  connection  that  the  Ohio  Statesman,  (Co- 
lumbus), of  January  2,  1837,  states  that  some  of  the  Ohio  banks  had  for 
six  months  been  refusing  the  payment  of  specie. 

15  History  of  Banking  in  the  U.  S.  —  Knox,  p.  675. 


160  Ohio  Arch,  and  Hist.  Society  Publications. 

Ohio  Bank  Convention,  June  1837.  —  On  June  5,  1837  a 
convention  of  the  Ohio  banks  was  held  at  Columbus,  at  which 
twenty-three  of  the  thirty-two  chartered  banks  then  in  the  state, 
were  represented.  The  banks  present  pledged  themselves  not  to 
part  with  any  of  their  gold  or  silver ;  to  manage  their  affairs  so 
as  to  be  able  to  resume  specie  payments  at  "any  moment;"  to 
receive  of  their  customers  in  payment  of  debts  the  notes  of  all 
the  banks  represented  in  the  convention;  to  discountenance  im- 
provident issues  of  paper,  —  each  bank  to  pay  out  the  paper  of 
the  others  in  preference  to  its  own,  so  as  to  reduce  the  circula- 
tion ;  and  that  each  bank  would  furnish  the  others  with  a  certi- 
fied statement  of  its  condition  every  sixty  days.18 

Statistics  of  Ohio  Banks  in  1837.  —  The  condition  of  the 
authorized  banks  of  Ohio  at  three  different  periods  in  1837  are 
shown  in  the  following  table,  from  which  it  may  be  seen  that 
while  the  capital  shows  a  continual  increase,  the  circulation 
shows  a  continual  decrease  from  January  to  December. 

CONDITION    OF    AUTHORIZED    BANKS    IN    OHIO    ON    THREE    DIFFER- 
ENT DATES  IN    1837. 

January.19  May.20  ^December?0 

Capital  stock  paid  in $9,247,296  98  $10,870,089  25  $11,331,618  96 

Circulation    8,326,974  80  7,697,261  30  6,221,136  90 

Deposits    3,464,45021  6,857,28257  5,232,52954 

Due  to  banks 1,471,659  60  1,142,965  76  481,344  38 

Due  Treasurer  of  U.  S...     4,126,483  30  1,279,894  75  348,905  67 

Surplus  fund 143,913  12  114,878  12 

Contingent  fund  306,837  99  110,183  02  129,412  52 

Expenses    28,596  56  19,566  74 

Profits    554,88427  883,83539  596,53877 

Discounts   18,178,69997  19,505,66284  17,212,69423 

Loans    to    directors    and 

stockholders    2,388,83052  1,466,17456 


16  Ibid. 

"Ohio  Exec.  Doc.,  1837-8,  No.  1.     Gov,  Vance's  Message  of  Dec. 
5,  1837.     See  also  Chapter  VI,  p.  155. 

18  Dayton  Journal,  June  13,  1837. 

19  Ohio  Exec.  Doc.  1836,    No.  42.  —  State  Auditor's  Report  of  Jan. 
20,   1837. 

20  Ohio  Exec.  Doc.  1837,    No.  30.  — State  Auditor's  Report  of  Jan. 
27,  1838. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    161 

Due  from  banks 4,597,597  46  2,763,011  43  1,340,338  12 

Specie    on   hand 3,153,33494  2,311,61444  2,674,21269 

Notes  of  other  banks  on 

hand  1,710,82748  1,151,48593  864,59708 

Real  estate  and  other  in- 
vestments    271,55896  398,07404  387,42726 

From  the  above  table  it  may  be  seen  that  the  deposits  show 
a  big  increase  from  January  to  May,  the  time  of  suspension, 
and  then  a  decrease,  not  so  large,  however,  from  May  until  De- 
cember; and  also,  that  while  the  specie  on  hand  was  less  in  May 
than  in  January,  it  had  regained  some  of  this  loss  by  December. 

Repeal  of  Law  prohibiting  Small  Notes.  —  Governor 
Vance  in  his  message  of  December  5,  1837  called  attention  to  the 
decrease  of  circulation  and  increase  of  specie  made  by  the  banks 
during  the  preceding  six  months,  remarking:  "Our  commercial 
and  agricultural  wants  require  a  circulation  capable  of  expansion 
today  and  contraction  tomorrow."21  As  a  member  of  the  Whig 
party,  again  in  power  in  Ohio,  he  favored  the  repeal  of  the  small 
note  law,  which,  passed  by  the  Democrats  in  1836,  had  consid- 
erably restricted  the  note  issues  of  the  banks.  Accordingly  the 
legislature,  on  March  13,  i838,22  passed  an  act  repealing  the  law 
of  March  14,  1836,  which  had  prohibited  notes  less  than  $5.23 

21  Ohio  Exec.  Doc.  1838-9,   No.  1. 

Ohio  Statesman,  Dec.  5,  1837. 

It  may  be  noted  here  that  his  critics  claimed  that  he  overlooked  the 
fact  that  part  of  the  specie  represented  special  deposits  of  the  govern- 
ment over  which  they  had  no  control;  and  that  much  of  the  reduction  of 
circulation  was  due  to  an  exchange  of  each  other's  notes  between  the 
banks  as  soon  as  they  had  suspended.  —  Ohio  Statesman,  Dec.  8,  1837. 

The  Ohio  Statesman  of  Feb.  16,  1838  gives  statistics  of  certain  banks 
on  May  11,  1837,  which  shows  them  to  have  had  the  following  ratios  of 
circulation  to  specie : 

Massillon   Bank   $13    in  paper  to  $1  in  silver. 

Canton  Bank  23£  in  paper  to  1  in  silver. 

Sandusky  Bank    9    in  paper  to  1  In  silver. 

Urbana  Bank    11£  in  paper  to  1  in  silver. 

Miami  Exporting  Co.   (Cin.)  ...  4    in  paper  to  1  in  silver. 

Miami  Export.  Co.    (Conneaut)  13    in  paper  to  1  in  silver. 
22 Laws  of  Ohio,  Vol.  XXXVI,  (1838),  p.  55. 
23  See  Chapter  VI,  p.  154. 
11 


162  Ohio  Arch,  and  Hist.  Society  Publications. 

1 

Partisan  Nature  of  the  Vote.  —  The  partisan  nature  of  the 
contest  over  the  repeal  of  the  small  note  law  is  shown  by  the 
vote  on  the  act  of  March  13,  1838.  In  the  Senate  the  18  yeas 
were  all  Whigs,  and  the  16  nays  were  all  Democrats  but  one; 
in  the  House  the  measure  was  passed  by  a  unanimous  Whig 
vote,  every  Democrat  voting  against  it.24  Some  light  may  be 
thrown  upon  the  reason  for  this  vote  by  the  fact  that  of  405 
bank  officials  in  the  state  in  1837,  341  were  said  to  be  Federals, 
(Whigs),  while  only  64  were  Democrats.25 

Resumption  of  Specie  Payment.  —  The  law  of  Mar.  13, 
1838  provided  that  those  banks  which  had  surrendered  the  right 
to  issue  bills  less  than  $5  might  again  issue  such  if  they  would 
redeem  in  specie.  They  were  required  to  resume  specie  pay- 
ment by  July  4,  1838  provided  the  banks  of  New  York,  Phila- 
delphia, and  Baltimore  should  have  resumed  by  that  time.26  But 
the  latter  banks  did  not  resume  by  that  date.  They  held  a  con- 
vention in  Philadelphia  July  23,  however,  at  which  they  agreed 
to  resume  specie  payment  August  13,  i838.27  The  Ohio  banks 
had  announced  from  the  first  that  they  stood  ready  to  resume 
specie  payment  as  soon  as  resumption  had  taken  place  generally 
in  the  eastern  cities.28  Accordingly  at  a  convention  held  in 
Columbus,  soon  after  the  Philadelphia  bank  convention,  the 
Ohio  banks  decided  that  they  also  would  resume  specie  payment 
on  the  i  jth  of  August.29  The  banks  represented  in  the  Philadel- 
phia convention  did  resume  on  that  date;  others  followed  their 
example,  and  Miles'  Register  of  August  18,  1838,  says:  "It  is 
certain  that  every  solvent  bank  in  the  country  will  pay  specie  on 
demand  on  or  before  the  first  day  of  January  next."30 


24  Ohio  Statesman,  June  27,  1838. 

25  The  number  of   Federals   and   Democrats   among  the   Presidents, 
Cashiers,   Tellers,   Directors,   and  Agents   of  each  bank  is   given  in  the 
Ohio  Statesman  of  August  9,  16,  and  23,  1837. 

26  Laws  of  Ohio,  Vol.  XXXVI,  p.  55. 

History  of  Banking  in  the  United  States  —  Knox,  p.  672. 
2TNiles,  54:369,  Aug.  11,  1838. 

28  Ohio  Exec.  Doc.  1837-8,  No.  30. 

29  Columbus  Journal,   Aug.  3,   1838. 
"Niles,  54:385. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    163 

Statistics  of  Ohio  Banks  in  1838.  —  The  following  table 
will  show  the  condition  of  the  Ohio  banks  on  June  I,  1838,  a 
short  time  before  their  resumption  of  specie  payment.31 

Notes  and  bills  discounted $14,968,675 

Deposits  in  eastern  cities 2,078,899 

Due  from  banks 729,077 

Bank  notes   1,145,281 

Specie    2,879,209 

Real  and  personal  estate 361 , 160 

Other  investments   2,790 

-  $22,165,091 

Capital  stock  paid  in $9,835,199 

Circulation  6,340,947 

Deposits    2,848,464 

Due  to  banks 624,501 

Surplus   1,152,619 

Due  U.  S.  Bank 744,643 

Due  U.  S.  Bank  on  time 618,718 

-  $22,165,091 

Suspension  again  in  1839.  --The  effects  of  the  great  re- 
vulsion of  1837  were  gradually  subsiding,  when  the  suspension 
in  Pennsylvania  in  October  1839,  was  followed  by  nearly  all  the 
banks  of  the  Southern  and  Western  States.32  The  Second  An- 
nual Report  of  the  Bank  Commissioners  of  Ohio,  December 
20,  1840  says :  "With  the  exception  of  Ohio,  the  banks  west  and 
south  of  New  York  have  been  in  a  state  of  suspension  for  the 
last  fourteen  months.  This  fatal  policy  commencing  in  the  city 
of  Philadelphia,  where  there  is  a  vast  amount  of  banking  capital, 
created  a  general  panic  in  the  West."33  Even  Ohio  banks  did  not 
entirely  escape,  but  upon  the  suspension  of  the  Philadelphia 
banks  in  October  1839,  several  Ohio  banks  suspended  specie 
payment  for  a  period  of  not  over  thirty  days.34  "The  panic  thus 
created  would  undoubtedly  have  been  followed  by  a  general 
suspension  of  all  our  banks,  as  in  1837,"  says  the  First  Report 
of  the  Ohio  Bank  Commissioners,  "had  it  not  been  prevented  by 


31  Dayton  Journal,  June  12,   1838. 

33  Ohio  Exec.  Doc.  1840,  No.  21,  p.  5. 

33  Page  6. 

34  Ohio  Exec.  Doc.  1839,  No.  22,  p.  12. 


164  Ohio  Arch,  and  Hist.  Society  Publications. 

the  salutary  operation  of  the  law  of  the  last  session  of  the  Gen- 
eral Assembly."35 

The  Bank  Commissioner  Law.  —  The  law  here  referred  to 
was  that  passed  on  February  25,  i839,36  which  provided  that  the 
amount  of  bills  a  bank  might  circulate  at  one  time  should  not 
exceed  three  times  the  amount  of  specie,  exclusive  of  deposits, 
in  its  vaults  and  actually  belonging  to  the  bank.  In  case  of  ex- 
cess the  directors  were  liable  individually,  and  after  them  the 
stockholders  (in  proportion  to  the  amount  of  their  stock),  for 
the  amount  of  the  excess.  It  also  provided  that  the  banks  must 
pay  their  notes  in  gold,  silver,  or  current  notes  of  other  banks. 
If  they  failed  to  do  so  for  thirty  days  in  one  year  they  were  to 
be  closed  up.  The  Act  provided  for  three  Bank  Commissioners 
to  be  appointed  by  the  Legislature,  whose  duty  it  was  to  visit  the 
banks,  examine  their  books,  and  make  regular  reports.  They 
were  given  ample  power  to  carry  out  the  law. 

First  Annual  Report  of  Bank  Commissioners.  —  The  first 
annual  report  of  these  commissioners  was  made  December  16, 
i839.37  In  this  report  they  say  that  one  cause  that  increased 
the  drain  of  specie  from  Ohio  banks  and  drove  them  to  rapid 
curtailment  of  their  circulation  was  the  hostile  attitude  they  had 
assumed  toward  each  other,  which  course  operated  to  strengthen 
the  distrust  of  them  as  it  left  the  impression  on  the  public  mind 
that  they  placed  no  confidence  in  each  other.38  They  condemn 
the  policy  pursued  by  the  banks  of  issuing  post-notes,  payable 
at  a  future  day,  often  six  or  twelve  months,  and  not  bearing 
interest,  though  paid  out  at  par  for  the  bank's  own  debts  to  de- 
positors and  needy  borrowers.39  They  also  call  attention  to  the 
evil  of  foreign  bank  notes*0  and  condemn  the  practice  of  cre- 
ating bank  capital  by  the  stockholders  giving  what  was  called  a 
stock  note;  also,  closely  allied  to  the  latter,  the  large  loans  and 
discounts  made  to  directors  and  other  stockholders  "almost  un- 
limited in  amount  and  time  of  payment."41 


36  Ibid. 

86  Rev.  Stat.  1841,  p.  126. 

37  Ohio  Exec.  Doc.  1839,   No.  22. 
88  Ibid.,  p.  9. 

39  Ibid.,  p.  13. 

40  Ibid.,  p.  15. 

41  Ibid.,  p.  20. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    165 

The  following  table  taken  from  the  report  of  the  bank  com- 
missioners in  1842  shows  the  extent  of  this  loaning  to  stock- 
holders : 


INDEBTEDNESS    OF   THE    DIRECTORS    AND    OFFICERS    OF    EACH    BANK, 

AT    THE    TIME    OF    EXAMINATION,     AS     PRINCIPALS,     AND 

LIABILITY    AS    SECURITY,    AND    THE   AMOUNT    OF 

STOCK     HELD    BY    THEM.42 


Names  of  Banks. 

Indebtedness  as 
principals. 

Liabilities  as 
security. 

Amount  of  stock 
owned  by  di- 
rectors and  of- 
ficers. 

Commercial  Bank  of  Cincinnati               •  . 

$89  183 

$45  821 

$46,900 

Franklin  Bank  of  Cincinnati           .         .  . 

43  012 

49,062 

25,800 

Lafayette  Bank  of  Cincinnati         

79,986 

22,003 

18  600 

Ohio  Life  Insurance  &  Trust  Co 

61  185 

5  ,  194 

Dayton  Bank                                           ..... 

5  ,  198 

13,326 

30,550 

Bank  of  Xenia             ... 

25,632 

^44,736 

42,283 

Bank  of  Circleville  

40,778 

49,233 

38,200 

Bank  of  Muskingum           

30,112 

6,693 

89,400 

Bank  of  Zanesville  

5,161 

3,635 

59,206 

Bank  of  Marietta  

43,688 

36  ,  142 

52,800 

Bank  of  Mt   Pleasant  

2,030 

9,563 

Bank  of  Wooster  

109,350 

161,804 

182,054 

Bank  of  Massillon  

39,530 

50,886 

22,400 

Bank  of  Geauga  

14,766 

13,387 

20,195 

Bank  of  Norwalk  

11,070 

11,782 

22,175 

Bank  of  Sandusky 

44  590 

66  999 

24  350 

Clinton  Bank  of  Columbus  
Franklin  Bank  of  Columbus 

87,126 
9  420 

125,724 

40  488 

120,200 
164  600 

Columbiana  Bank  of  New  Lisbon 

10  413 

23  897 

31  525 

Belmont  Bank  of  St    Clairsville 

4  172 

14  337 

Commercial  Bank  of  Scioto 

16  839 

20  245 

23  819 

Farmers'  and  Mechanics'  Bank  of  Steu- 
benville 

30  827 

34  483 

17  350 

Western   Reserve   Bank  

17,566 

29  253 

73,792 

$815,432 

$860,995 

$1,123,199 

42 Annual  Report  of  the  Ohio  Bank  Commissioners,  Dec.  17,  1842, 
p.  40.  In  addition  to  the  list  given  here,  two  of  the  directors,  as  mem- 
bers of  ,a  firm,  owe,  as  principals,  $9,500.  In  the  item  of  liability  as 
indorsers,  in  the  greater  amount  of  cases,  two  persons  are  liable  for  the 
same  indorsement,  which,  in  the  aggregate,  counts  the  sum  twice. 

43  Of  these  liabilities  as  securities,  $30,266.66  of  the  amount  appears 
duplicated,  by  there  being  two  or  more  names  of  directors  upon  the  same 
obligation. 


166  Ohio  Arch,  and  Hist.  Society  Publications. 

"Too  large  loans  to  a  few  individuals,"  said  the  commission- 
ers, "often  renders  precarious  the  solvency  of  the  banks,  and 
this  is  particularly  the  case  where  the  directors  and  officers 
monopolize  in  a  great  measure  their  available  resources  —  and 
the  spirit  of  speculation,  fostered  and  encouraged  by  heavy  ac- 
commodations from  them  has  done  more  within  the  last  few 
years  to  place  the  whole  business  of  the  country  in  the  hands  of 
a  few,  and  to  overthrow  all  the  sound  principles  of  trade,  con- 
vulse the  community,  and  prostrate  the  laboring  classes  than  all 
other  causes  combined."45  They  found  it  a  "general  source  of 
complaint"  that  a  "very  limited  number  of  persons  are  permitted 
to  obtain  a  great  proportion  of  the  discounts  from  our  banks."46 
They  thought  that  as  many  banks  were  created  in  the  state  by 
persons  who  wished  to  borrow  instead  of  lend  money,  thus 
bringing  about  large  issues  of  notes  without  any  liability  for 
their  redemption,  the  law  of  February  .25,  1839  should  be 
amended.  They  believed  that  no  bank  of  issue  was  safe  unless 
there  existed  a  direct  and  unqualified  liability  to  the  public 
creditor  on  the  part  of  every  stockholder  and  a  special  liability 
of  the  directors  and  officers  to  the  stockholders  not  concerned 
in  its  management.47  "The  great  cardinal  principle  of  individual 
liability,"  they  said,  "is  the  only  true  foundation  of  safety." 

This  report  shows  how  far  from  perfect  was  the  banking 
system  in  the  state  at  that  time  and  also  forshadows  later 
action  of  the  legislature  regarding  reforms.  The  passage  of 
the  law  requiring  examinations  and  supervisory  control  of  the 
banks  elicited  some  degree  of  hostility  and  in  particular  in- 
stances, manifestations  of  determined  opposition  to  the  perform- 
ance of  its  requirements.  The  refusal,  however,  of  the  Supreme 
Court  to  grant  an  injunction  against  an  examination  of  the  La- 
fayette Bank  of  Cincinnati  by  the  Bank  Commissioners,  prob- 
ably conduced  to  a  general  acquiescence  in  the  constitutional  re- 
quirements of  the  law.48 


45  Ohio  Exec.  Doc.  1839,  No.  22,  p.  21. 

46  Ohio  Exec.  Doc.  1839,  No.  22,  p.  22. 

47  Ibid.,  p.  24. 

48  Ohio  Exec.  Doc.  1839,  No.  22,  p.  5. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    167 

Re-Enactment   of   Law   forbidding   Small   Notes.  —  The 

law,  however,  was  insufficient  to  remove  all  the  evils  existing  in 
the  banking  system  in  Ohio.  It  was  amended  at  various  times, 
notably  the  act  of  March  23,  1840  forbidding  passing  of  notes 
less  than  $5  or  of  post  notes,  or  of  notes  not  payable  in  specie,40 
and  requiring  banks  to  make  out  statements  once  a  month  or 
oftener  including  such  information  as  the  commissioners  should 
require.50  But  it  was  becoming  evident  to  all  concerned  that 
some  more  radical  reform  was  required. 

Messages  of  Governor  Shannon.  —  The  Governor's  Mes- 
sage of  December  1839,  after  considering  the  project  of  a  State 
Bank  and  that  of  Free  Banking  came  to  the  conclusion  that  a 
system  of  Independent  Banks,  properly  restricted,  under  the 
supervision  of  Commissioners,  and  at  all  times  under  the  control 
of  the  legislature,  if  not  the  best  system  theoretically,  would  yet 
be  the  best  then  within  reach.51  Again  in  his  Message  of  De- 
cember 8,  1840,  Governor  Shannon  remarked :  "The  evils  which 
have  been  inflicted  on  the  community  through  the  instrumentality 
of  banks  of  circulation  have  become  so  great  and  alarming  that 
the  question  will  soon  be  between  reformation  and  destruction."52 
"If  the  effort  to  reform  our  banks  should  prove  .  unsuccessful 
the  remedy  twill  be  found  in  the  substitution  of  banks  of  dis- 
counts and  deposits  for  those  of  circulation."53  He  argued  that 
the  limited  liability  of  the  stockholders  not  only  furnished  an  op- 
portunity to  commit  fraud  with  impunity,  but  held  out  an  induce- 
ment to  excessive  banking,54  and  added :  "Bankers  should  be 
placed  on  the  same  footing  with  other  individuals;  made  re- 
sponsible for  their  debts  like  other,  citizens ;  and,  being  so  re- 
sponsible, they  would  conduct  their  business  with  more  prudence 
and  regularity,  and  consequently  with  more  safety  to  the  pub- 
lic."55 But  he  opposed  a  State  Bank  and  in  his  Inaugural 

49  Laws  of  Ohio  Vol.  XXXVIII,  p.  113. 
See  also  Niles,  58  :115,  Apr.  25,  1840. 

60  Rev.  Stat.  of  1841,  p.  132. 

61  Niles,  57 :279,  Dec.  28,  1839. 

52  Ohio  Exec.  Doc.  1840,  No.  1,  p.  8. 

63  Ibid.,  p.  9. 

64  Ibid.,  p.  20. 

65  Ibid.,  p.  21. 


168  Ohio  Arch,  and  Hist.  Society  Publications. 

Address  of  December  14,  1842  declared  against  a  State  Bank  in 
any  form,  favoring  a  system  of  local  banks  with  increased  per- 
sonal liability  and  more  safeguards. 

Message  of  Governor  Corwin.  —  Gov.  Thos.  Corwin  in  his 
inaugural  address56  December  16,  1840  declared  it  the  duty  of 
the  Legislature  at  once  to  establish  some  permanent  system  of 
banking.  He  analyized  the  objections  to  banks  as  instruments  for 
currency  as  follows : 

1 .  The  use  of  their  credit  to  extend  their  circulation  lead- 
ing to  suspension  and  depreciation. 

2.  Expanding    and    contracting    their    circulation    causing 
fluctuation  in  the  prices  of  labor  and  property. 

Explaining  these  away,  on  the  whole,  he  suggested  two  plans 
that  had  been  proposed: 

1.  A  State  Bank  with  branches  (State  to  own  not  over  1/5 
of  the  stock). 

2.  Re-charter  of  the  safest  of  the  then  existing  banks. 

As  safeguards  he  suggested :  limited  dividends  to  stockhold- 
ers, the  state  to  get  the  rest ;  and  limited  circulation  as  compared 
to  capital. 

Question  whether  to  adopt  State  Bank  or  Safety  Fund 
System.  —  The  Ohio  State  Journal  in  Jan.  1841  said :  "The 
absorbing  question  here  among  those  desirous  to  place  the  mon- 
eyed institutions  of  the  State  in  a  safe  and  useful  condition  is 
whether  a  State  Bank  similar  to  Indiana's  or  whether  the  present 
banks  (or  those  of  them  entitled  to  public  confidence)  shall  be 
united  in  a  kind  of  New  York  safety  fund  system  with  such 
modifications,  however,  as  shall  secure  a  larger  amount  of  specie 
in  the  vaults  of  the  banks  in  proportion  to  the  amount  of  paper 
circulation  than  is  exhibited  in  the  report  of  the  New  York 
banks.  The  probability  is  that  the  committee  to  whom  this  sub- 
ject is  referred  will  report  a  bill  on  the  latter  plan;  chiefly  be- 
cause the  finances  of  the  State  are  thought  to  be  unfavorable  to 
the  former.  The  great  difficulty  appears  to  be  in  determining  a 
rule  by  which  the  real  available  means  of  the  present  banks  may 
be  ascertained,  in  order  to  fix  the  amount  of  circulation  to  which 


Ohio  Exec.  Doc.  1840,  p. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    169 

each  may  be  entitled,  when  presenting  claims  to  the  board  of 
control  for  admission  into  the  family  of  solvent  banks."57 

Currency   Fluctuations    in    Ohio.  —  That   such    difficulty- 
may  well  have  existed  can  be   seen   from  the   following  table 
showing  the  amount  of  currency  circulating  in  Ohio  in  1839  and 
40 :58 

Currency.  Premium  on 

June  1,    1839 $9,168,903  Specie. 

Sept.  30 ,   1839 8 , 107 , 692  decrease^    $1 , 059 , 300 

Jan.  1,   1840 6,624,987  decrease^      1,482,515      6i  and  7 

April  1 ,    1840 5 , 956 , 398  decrease=         688 , 597      7£  and  8 

May  1,   1840 6,391,205  increase^          431,808      6    and  6^ 

July  1,   1840 6,362,770  decrease^  28,436      4    and  4^ 

October  1,    1840 6,686,756  increase^          318,986      3J  and  4 

* 

Yet,  notwithstanding  the  steady  reduction  in  currency  and 
bank  accommodations  evinced  in  this  table,  the  amount  of  busi- 
ness done  in  the  State  was  large,  and  during  the  last  few  months, 
of  1840,  constantly  increasing.59 

Exports  from  Ohio  in  1840.  —  The  following  table  of 
Ohio  statistics  for  products  exported  from  the  State  in  1840 
will  indicate  something  of  the  volume  of  business  done  in  the 
State  during  that  year  alone : 

Bread  stuffs,   mostly  wheat  and  flour;  estimated  value $7,098,810 

Other  agricultural  products,   including  distilled  spirits 1,874,402 

Products   of   domestic   animals,    chiefly   pork,    lard,    butter, 

cheese,    and  wool 2,315,069 

Domestic  animals  driven  from  the  state  on  foot 2,600,000 

Products  of  mines  and   forests 782,700 

Manufactured   articles    .  5,000,000 


Total  value  of  products  of  Ohio  exported  in  184060 $19,670,981 

Effect  of  Internal  Improvements.  —  Moreover  for  fifteen 
years  Ohio  had  been  engaged  in  Internal  Improvements  with  an 


S7Niles,  59:342,  Jan.  30,   1841. 

The  bill  referred  to  was  reported  soon  after',    (p.  342). 

MNiles,  59:219,   Dec.  5,   1840. 

69  Ibid. 

80  Annual  Report  Commissioners  of  Canal  Fund,  Jan.  21,  1842,  p.  18. 


170  Ohio  Arch,  and  Hist.  Society  Publications. 

average  expenditure  of  nearly  $1,000,000  a  year,  the  effects  of 
which  are  thus  described  in  the  Annual  Report  of  the  Commis- 
sioners of  the  Canal  Fund  :61  "They  have  opened  new  channels 
of  intercommunication  between  different  portions  of  our  State, 
developing  the  value  and  bringing  into  use  the  treasures  of  ex- 
tensive coal  formations  —  furnishing  newr  avenues  of  foreign 
trade,  with  every  facility  for  the  various  transactions  of  business, 
in  almost  every  quarter  of  the  State.  By  these  means  of  com- 
munication, our  citizens  have  been  enabled  to  throw  their  pro- 
duce into  the  northern,  eastern,  and  southern  markets,  at  an 
expense  so  greatly  diminished  as  to  increase  its  value  at  home 
twenty-five  to  fifty  per  cent."62 

Canal  Receipts  and  Shipments  at  Cleveland.  —  The  rapid 
and  usually  successive  increase  of  production  in  the  state  may 
be  inferred  from  the  following  receipts  at  Cleveland  via  the 
Ohio  Canal  :63 

1838 287,465  bbl.  flour;  1,229,012  bu.  wheat;     73,292  bu.  coal 

1839 264,887  bbl.  flour;  1,515,820  bu.  wheat;  134,881  bu.  coal 

1840 505,461  bbl.  flour;  2,155,820  bu.  wheat;  172,206  bu.  coal 

The  increase  of  imports  also  is  indicated  by  the  following 
shipments  from  Cleveland  via  the  Canal  :64 

1837 62,977  bbl.  salt  and  10,757,386  Ibs.  merchandise 

1838 63,465  bbl.  salt  and  18,875,286  Ibs.  merchandise 

1839 109,916  bbl.  salt  and  19.125,852  Ibs.  merchandise 

1840 77,254  bbl.  salt  and  10,783,514  Ibs.  merchandise 

1841 59,773  bbl.  salt  and  15,164,747  Ibs.  merchandise 

Low  Prices  and  Hard  Times.  —  The  falling  off  in  these 
imports  in  1840-41  is  probably  due  partly  to  increased  home 
production,65  but  largely  to  the  depressed  prices  of  home  prod- 

61  Report  of   Dec.  30,   1843,  p.   13. 

82  In  1842  Ohio  produced  1,237,712  tons  of  hay;  5,264,766  Ibs.  of 
tobacco;  7,277,309  bu.  of  potatoes;  19,381,035  bu.  of  oats;  25,387,439 
bu.  of  wheat;  39,424,221  bu.  of  corn.  —  Report  of  Canal  Fund  Commis- 
sioners, Dec.  30,  1843,  p.  11. 

63  Sixth  Report  Board  of  Public  Works,  Jan.  2,  1843,  p.  41. 

64  Ibid.,  p.  42. 

65  Ohio  produced   in   1840  —  297,350   bu.   salt,  value   $89,205;    1850  — 
550,350  bu.  salt,  value  $132,293;  1860  —  2,000,000  bu.  salt,  value  $500,000. 
—  Report  of  Commissioner  of  Statistics  1859. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    171 

ucts.  For  example,  the  price  of  wheat  at  Cincinnati,  which  had 
risen  from  62c  a  bushel  in  1834  to  $1.25  in  1836,  dropped  to  650 
in  1839  and  6oc  in  1840;  flour  dropped  from  $8.25  a  barrel  in 
1836  to  $3.60  in  1840;  and  hogs  from  $7  a  cwt.  in  1836  to  $475 
in  1840,  $2.25  in  1841,  and  $1.75  in  i84i.66 
The  Second  Annual  Report  of  the  Bank  Commissioners  of 
Ohio,  December  20,  1840,  says:  "The  past  two  seasons  have 
been  distinguished  by  unusual  agricultural  productiveness  in  our 
own  State,  which,  under  circumstances  of  less  production  in 
other  agricultural  states  of  the  Union,  would  have  tended  to  a 
rapid  discharge  of  the  obligations  of  our  citizens  to  the  eastern 
cities  In  consequence  of  an  equal  production  in  other  states,  as 
well  as  abundant  crops  in  other  parts  of  the  world,  the  prices  of 
the  staple  articles  of  subsistence  have  declined."67 

So  it  cannot  be  shown  that  the  low  prices  and  hard  times 
of  1841  and  1842  are  entirely  due  to  banking,  but  the  fact  that 
in  the  face  of  the  larger  production  and  increased  business  in 
the  state  the  specie  in  the  banks  was  reduced  from  $3,153,334 
in  1837  to  $1,052,767  in  1841  and  their  circulation  from  $9,247,- 
296  to  $3, 584,34 168  during  the  same  time,  has  much  significance 
if  there  is  anything  in  the  quantity  theory  of  money. at  all.  And 
the  following  quotation  from  Niles'  Weekly  Register  of  Decem- 
ber 31,  1842  seems  to  justify  the  inference:69  "Hard  Times  in 
Ohio.  The  circulation  of  the  sound  banks  is  reduced  to  a  very 
trifling  amount,  and  as  the  currency  is  almost  exclusively  of 
hard  money,  the  value  of  property  of  every  description  is  cor- 
respondingly depressed.  The  distress  which  is  thus  brought 
upon  debtors  may  be  understood  from  the  facts."70 

Agitation  for  New  Banking  System  in  Ohio.  —  There  was 
evident  need  of  a  remedy  soon.  The  charters  of  nearly  all  the 
banks  in  Ohio  would  expire  in  1843,  and  the  interests  and  busi- 
ness of  the  people  demanded  that  the  capital  of  those  banks 
should  be  retained  in  that  business  in  some  form.  "A  large  por- 


68  Third  Annual  Report  of  Ohio  Commissioner  Statistics  1859,  p.  96. 
See  also  Cincinnati  Daily  Enquirer,  Feb.  23,  1846.    Also  Appendix,  p.  291. 

67  Ohio  Exec.  Doc.,  1840,  No.  21,  p.  5. 

68  Report  Comptroller  Currency,  1876,  p.  CXVI. 
88  Niles,  63:280. 


172  Ohio  Arch,  and  Hist.  Society  Publications. 

tion  of  this  capital,"  says  Governor  Corwin  in  his  message  of 
December  7,  1841,  "is  held  by  owners  in  other  states.  Should 
the  capital  of  those  banks  be  withdrawn  from  its  accustomed 
uses,  the  portion  of  it  owned  abroad  be  taken  home,  and  no 
means  of  similar  investment  provided,  results  must  follow  more 
disastrous  to  the  State  than  any,  even  in  the  worst  times,  which 
it  has  hitherto  encountered."71 

In  the  Ohio  Senate  in  April  1841  the  Bank  Committee  pre- 
sented a  bill  to  re-incorporate  the  banks  of  the  state  on  the  so- 
called  safety-fund  principle;  but  there  was  also  a  minority  re- 
port,72 and  a  week  later  the  legislature  adjourned  after  post- 
poning all  the  bank  projects.73  The  Springfield  Ohio  Republican 
in  October  1841  gave  the  aggregate  banking  capital  of  Ohio  as 
$i6,ooo,ooo,74  and  added  that  nearly  the  whole  amount  of  bank- 
ing capital  required  for  the  trade  of  the  community  was  about 
to  be  withdrawn  by  the  expiration  of  charters  January  i,  i843.75 
The  Ohio  State  Journal  commenting  on  the  same  thing  said : 
"A  fearful  time  ahead!  It  must  unavoidably  derange  the  busi- 
ness of  Ohio  to  such  a  degree  that  its  blighting  effects  will  be 
felt  for  fifteen  years  to  come."76  Governor  Corwin  in  his  message 
of  December  6,  i&4277  discusses  the  expiration  of  the  bank  char- 
ters January  i,  1843;  says  tne  withdrawal  of  the  $5,000,000  bank 
capital,  much  of  which  was  owned  in  other  states,  would  in- 
crease the  existing  embarrassments,  retard  the  payment  of  debts, 
sink  still  lower  the  market  value  of  property,  and  hurt  debtors 
without  helping  the  creditor  class ;  and  he  recommends  to  the 
legislature  a  permanent  system  of  safe  currency  "composed  of 
coin,  and  Bank  paper  convertible  into  at  the  pleasure  of  the 
holder." 


"Ohio  Exec.  Doc.,  1841-2,  No.  1,  p.  13. 
72Niles,  60:71,  Apr.  3,  1841. 

73  Ibid.,  p.  90,  Apr.   10,  1841. 

74  The  capital  of  the  incorporated  banks  of  Ohio  in  1841   was  said 
to  be  $8,103,243.  —  See  Appendix,  p.  283. 

75Niles,  61:119,  Oct.  23,  1841. 
76Niles,  6:119,  Oct.  23,  1841. 
"Ohio  Exec.  Doc.,  1842,  No.  1,  pp.  7  and  8. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    173 

Third  Annual  Report  of  Bank  Commissioners.  —  In  their 
third  annual  report,  December  17,  i842,78  the  bank  commission- 
ers stated  that  there  were  then  in  Ohio  twenty-three  banks  which 
redeemed  their  notes  in  specie  when  demanded ;  that  the  charters 
of  thirteen  of  them  would  expire  January  i,  1843,  those  of  two 
others  would  end  January  i,  1844,  four  in  1850,  two  in  1854, 
and  two  in  1855  >"  that  ^  anv  were  to  be  renewed  the  time  was 
favorable  to  throw  around  them  such  restrictions  and  safeguards 
as  would  best  guard  against  bankruptcy,  fraud,  etc.79  They 
added:  ''Whatever  may  be  the  future  policy  of  the  State  in 
regard  to  supplying  the  places  of  the  expiring  and  broken  banks, 
it  would  seem  to  be  pretty  clearly  settled  that  public  opinion  is 
adverse  to  the  present  unrestricted  system  of  banking"  Some 
of  the  old  banks  were  twenty-five  years  old  and  had  several  times 
suspended,  and  there  were  large  amounts  of  old  debts,  par- 
ticularly among  officers,  directors,  and  stockholders,  that  were  in 
need  of  being  closed  up.  In  view  of  these  things  the  commis- 
sioners thought  that  "both  the  interests  of  the  public  and  the 
future  solvency  of  the  banks  would  be  better  secured  by  the 
incorporation  of  new  banks  than  by  the  renewal  of  the  old." 
They  said  that  "the  great  and  fundamental  error  in  the  banking 
system  may  be  traced  to  the  want  of  individual  liability  of  the 
directors  and  stockholders,  to  pay  the  debts  they  contract,  and 
redeem  the  paper  they  put  in  circulation.  —  The  same  man,  in 
his  corporate  capacity,  might  be  poor,  but,  as  an  individual  he 
might  be  rich ;  and  his  wealth,  in  a  great  measure,  drawn  from 
the  profits  or  spoils  of  the  corporation  of  which  he  was  a  mem- 
ber."81 The  former  charters  of  the  banks  had  been  granted  for 
a  specific  period,82  and  were  too  vague  and  indefinite  in  relation 
to  the  capital  stock,  the  commissioners  thought;  there  was  -too 
much  uncertainty,  they  said;  consequently  they  thought  a  radical 
change  in  the  system  was  necessary.83 


78  Ibid.,  No.  15. 

79  Ibid.,  p.  6. 

80  Ibid.,  p.  7. 

81  Ohio  Exec.  Doc.,  1842,  No.  15,  p.  13. 

82  Ibid.,  p.  7. 

83  Ibid.,  pp.  8  and  10. 


174 


Ohio  Arch,  and  Hist.  Society  Publications. 


Taxes  paid  by  Ohio  Banks,  1831-43.  —  One  of  the  changes 
the  commissioners  recommended  was  in  regard  to  taxation.  The 
banks,  they  said,  had  not  paid  their  share  of  the  taxes  in  propor- 
tion to  the  capital  invested.  "The  rate  of  assessment  for  State, 
canal,  and  school  purposes  is  five  mills  on  the  dollar,"  they  said, 
while  the  banks  pay  less  than  half  the  tax  on  other  property.84 

The  following  table  shows  the  amount  of  tax  paid  by  all 
the  Ohio  banks  on  dividends  reported  from  June,  1831  to  No- 
vember 15,  1843,  as  compared  with  the  amount  of  banking 
capital. 

85  Tax  paid 
on  dividends. 

1831    $3,621.857 

1832    : 7,066.045 

1833    12,998.429 

1834    14,737.30 

1835  25,836.405 

1836  71,317.74 

1837  57,698.01 

1838  50,989.74 

1839  59,143.40 

1840  30,784.71 

1841  31,640.29 

1842  14,074.46 

1843  19,234.33 


"Rate 

86  Capital. 

in  mills. 

$5,819,692 

4.44 

8,369,744 

8.52 

9,247,296 

6.25 

11,331,618 

4.5 

10,153,846 

5.82 

10,507,521 

2.92 

8,103,243 

3.7 

7,034,083 

2.0 

6,805,352 

2.82 

Total    $398,142.716 

This  shows  the  rate  of  tax  paid  by  the  banks  to  have  been 
lower  in  1840  and  1841  than  in  the  preceding  years,  if  we  base 
our  estimates  on  capitalization.  But  if  we  consider  that  the  first 
column  represents  the  total  tax  paid  by  all  the  banks,  while  the 
second  includes  the  capital  of  only  the  banks  reporting,  we  may 
assume  that  the  actual  rate  on  capitalization  paid  by  the  banks 
was  much  lower  than  the  table  indicates.  For  example  in  the 
year  1841  the  Springfield  (O.)  Republican  estimated  the  total 


84  Ibid.,  p.  9. 

85  Special  Report  of  Ohio  State  Auditor,  Jan.  20,  1844. 

86  See  Appendix,  p.  283. 

87  Figured  from  the  first  two  columns. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    175 

banking  capital  in  the  state  at  $i6,ooo,ooo,88  whereas  the  table 
gives  only  $8,000,000.  If  we  figure  the  rate  of  tax  paid  by  the 
banks  that  year  on  the  former  figure  the  rate  appears  as  only 
1.85  mills  on  the  dollar. 

Difficulty  in  collecting  Taxes  from  the  Banks.  —  But 
whatever  the  rate  may  have  been  on  the  actual  capitalization,  it 
is  certain  that  under  the  law  of  March  12,  1831  the  State  found 
a  good  deal  of  difficulty  in  getting  the  banks  to  report  their 
dividends.  The  state  auditor's  report  of  March  4,  1839  gives 
certain  resolutions  passed  by  the  legislature,  one  of  which  is  the 
following:89  "Resolved  further,  that  the  Auditor  be  and  he  is 
hereby  required  to  cause  to  be  prosecuted  all  such  banks,  insur- 
ance, and  bridge  companies  as  have  not  complied  with  the  pro- 
visions and  requisitions  of  an  Act  entitled  'An  Act  to  tax  banks, 
insurance,  and  bridge  companies/  passed  March  12,  1831,  either 
by  totally  neglecting  or  refusing  to  make  a  return  of  their  divi- 
dends, or  which  have  made  incorrect  returns  of  such  divi- 
dends, after  giving  them  due  notice  of  the  demand  claimed  by 
the  State,  and  their  refusal  to  pay  the  same." 

Moreover  the  state  bank  commissioners,  in  their  report  of 
December  16,  1839,  speaking  of  dividends  and  other  profits,  say: 
"The  investigations  thus  far  have  disclosed  nearly  $20,000  due 
from  the  banks,  having  been  withheld  due  to  misconstruction  of 
the  law  or  noncompliance  in  reporting  dividends  to  the  Auditor. 
This  neglect  or  refusal  to  make  reports  according  to  existing 
laws  may  render  necessary  a  change  in  the  tax  law  for  banks, 
and  it  is  submitted  whether  it  would  not  be  advisable  to  tax  the 
capital  stock  hereafter  or  the  amount  of  money  loaned,  in  the 
same  manner  as  individuals  are  taxed."90  That  conditions  did 
not  improve  much  in  this  respect  is  evidenced  by  the  report  of 
the  commissioners  three  years  later  in  which  they  recommended 
a  radical  change  in  the  whole  banking  system. 

Bank  Failures  in  1841-2.  —  During  the  years  1841  and  1842 
many  Ohio  banks  failed.  The  bank  commissioners  attributed 
this  largely  to  the  fact  that  their  capital  was  so  invested  as  not 


88Niles,  61:119. 

88  Ohio  Exec.  Doc.,  1838-9,  No.  79. 

30  Ibid.,  1839,  No.  22,  p.  8. 


176  Ohio  Arch,  and  Hist.  Society  Publications. 

to  be  readily  available  in  case  of  emergency.  "In  every  instance," 
they  said  in  their  annual  report  of  December  17,  1843,  "not  only 
the  capital,  but  also  the  active  means,  including  much  of  their 
deposits,  were  found  to  have  been  diverted  from  their  legitimate 
uses,  and  to  have  become  sunk  in  a  suspended  debt  —  such  as 
judgments,  mortgages,  and  real  estate."  "Injudicious  loans  and 
discounts,  at  that  time  were  not  confined  to  any  one  bank ;  but 
the  same  recklessness  of  accommodation,  to  a  greater  or  less 
extent,  had  extended  itself  to  all."  The  effects  of  those  events, 
the  commissioners  observed,  "will  be  lasting,  as  they  have  shaken 
the  public  confidence  in  the  soundness  and  stability  of  our  whole 
banking  system."91 

Various  attempts  were  made  by  the  legislature  to  compel 
resumption.92  In  March  1842  the  Cincinnati  Gazette  was  com- 
plaining that  the  resumption  law  of  Ohio  had  not  yet  put  any  coin 
in  circulation;  but  that  Ohio  bank  notes  had  disappeared  and 
that  the  currency  then  consisted  of  Indiana  notes,  while  distress 
was  about  universal.03  The  reduction  in  the  note  circulation 
which  had  been  going  on  in  the  state  for  several  years,  had  failed 
to  give  Ohio  a  specie  currency.  The  vacuum  created  was  in 
part  filled  with  the  best  notes  of  other  states.  The  change  merely 
substituted  the  paper  of  the  banks  of  other  states  for  that  of  her 
own  banks.94  There  arose  once  more  a  "clamor  for  more  banks, 
rmore  bank  facilities,  a  new  and  more  enlarged  banking  system."95 
This  was  not  a  new  cry  by  any  means.  At  the  sessions  of  1835-6, 
1836-7,  1838-9,  and  1840-41,  petitions  for  more  banks  had  been 
crowded  on  the  legislature  in  large  numbers.96 


91  Ohio  Exec.  Doc.,  1843,  No.  38,  p.  8. 

92  Niles,  60 :71  —  61 :352  —  61 :400. 

February  18,  1842  an  Act  was  passed  to  enforce  specie  resumption 
which  provided  for  receivers  for  failed  banks.  —  Knox,  p.  673. 

The  latter  was  a  fruitful  subject  of  abuse  among  a  large  and  re- 
spectable class  of  citizens.  —  Report  of  Bank  Commissioners,  Dec.  17, 
1843,  p.  7. 

03  Niles,  62:80,  Apr.  2,  1842. 

94  Niles,  65:148,  Nov.  4,  1843. 

96  Ohio  Exec.  Doc.,  1844,  No.  1.  — Gov.  Hartley's  Message,  p.  17. 

96  Ibid.  Also,  Old  School  Republican  and  Ohio  State  Gazette  (Co- 
lumbus), Dec.  5,  1844. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    177 

The  Bank  Question  in  Ohio  involved  in  Party  Politics. 

-The  subject  of  banking  was  more  agitated  in  Ohio  than  in 
any  other  state  in  the  Union  at  that  time.97  And  certainly  there 
was  plenty  of  need  for  wise  legislation.  But  the  question  "be- 
came involved,  more  than  in  any  other  state,  with  the  fate  and 
fortune  of  political  parties.  With  but  little  regard  to  the  require- 
ments of  the  community,  the  conduct  of  existing  institutions,  or 
the  true  merits  on  which  the  question  should  have  turned,  —  the 
whole  was  made  to  depend  upon  the  success  of  one,  and  the 
defeat  of  the  other  political  party  in  the  State.  The  anti-bank 
party  succeeded  at  the  polls,  and  their  representatives  refused  to 
recharter  any  of  the  existing  institutions."98 

The  General  Banking  Law  of  1842.  —  On  Mar.  7,  1842  a 
general  law  to  regulate  banking  was  passed.  It  denned  the 
powers  of  banks ;  required  all  capital  to  be  paid  in  gold  or  silver 
before  the  bank  could  begin  business;  provided  for  paying  divi- 
dends; the  proportion  of  circulation  to  capital,  and  the  rate  of 
interest ;  a  special  tax  of  ^%  on  capital,  and  such  taxes  on  circu- 
lation as  the  legislature  should  impose;  and  the  creation  of  a 
safety  fund.  Finally,  the  president,  directors,  and  officers  were 
made  liable  for  any  loss  of  capital  and  mismanagement.99 

Governor  Thomas  W.  Bartley  in  his  message  of  December 
3,  1844,  said  of  this  act  that  it  was  "designed  to  supersede  the 
necessity  of  special  charters,  fixing  general  law,  the  powers, 
liabilities,  and  terms  for  future  banks,  and  imposing  rigid  restric- 
tions on  the  abuses  heretofore  practiced  in  banking.  This  law 
was  alleged  to  be  too  severe  and  on  February  21,  1843  ^  was 
amended,100  and  a  number  of  the  prominent  citizens,  belonging 
.to  companies  which  had  petitioned  the  Legislature  for  a  renewal 
of  their  charters,  were  authorized  to  organize  and  commence  the 
business  of  banking.  They  declined,  however,  to  engage  in  busi- 
ness on  the  conditions  imposed,  on  account  of  the  unsettled  state 
of  public  sentiment  on  this  subject,  and  with  a  view  of  obtaining 
banking  privileges  at  a  subsequent  period,  upon  terms  more  in 


97  Niles,  65  :243,  Dec.  16,  1843. 

98  Editorial  in  Niles,  67:368. 

"Laws  of  Ohio,  Vol.  XL.  p.  30.     Also  Knox,  p.  673. 
100  Laws  of  Ohio,  Vol.  XLI,  p.  36.    Also  Knox,  p.  677. 

12 


178  Ohio  Arch,  and  Hist.  Society  Publications. 

accordance  with  their  own  views."101  It  is  generally  considered, 
however,  that  the  reason  why  no  one  cared  to  organize  a  bank 
under  the  new  law  was  the  clause  providing  for  the  individual 
liability  of  stock  holders.  Niles  says  in  his  issue  of  February  8, 
1845, — "No  man  would  trust  himself  or  his  property  in  such  a 
scheme,  and  not  a  cent  of  the  stock  was  subscribed."102  Like- 
wise in  the  issue  of  December  16,  1843,  he  says  of  the  law  of 
1842  providing  for  new  banks  with  individual  liability  of  stock- 
holders: "This  project  of  course  failed.  Badly  as  good  banks 
were  supposed  to  be  wanting  there  were  no  monied  men  to  be 
found  so  foolish  as  to  risk  their  all  in  a  scheme  of  that  kind. 
The  law  remained  a  dead  letter,  and  the  State  has  to  depend 
upon  neighboring  States  for  the  most  of  its  circulating 
medium."103 

The  law  of  February  21,  1843  was  passed  by  a  strict  party 
vote.    The  vote  on  the  bill  stood : 

In  the  House Yeas  36        Nays  31 

In  the  Senate Yeas  19        Nays  12 


Total  vote   Yeas  55        Nays  43 

Three  Whigs  and  two  Van  Buren  Democrats  were  absent 
and  two  Democrats  voted  with  the  Whigs.104  Of  the  others  the 
Democrats  voted  for  the  law  and  the  Whigs  against  it.105 

Statistics  of  Ohio  Banks  in  1842.  —  Near  the  close  of  1842 
there  were  twenty-three  specie  paying  banks  remaining  in  the 
state.  The  following  table  shows  their  condition. 

101  Ohio  Exec.  Doc.,  1844,  No.  1,  p.  12. 

Examples  of  old  banks  authorized  to  organize  but  which  declined 
to  do  so  were  the  Bank  of  Dayton  and  the  Bank  of  Chillicothe;  while 
one  of  the  new  ones  authorized,  which  also  did  not  organize,  was  the 
Valley  Bank  of  Ohio  at  Eaton.  —  Local  Laws  of  Ohio,  Vol.  XLI,  pp. 
150,  177,  222. 

102  Niles,  67 :368. 
108  Niles,  65:243. 

The  banks,  however,  gave  other  reasons  for  objecting  to  the  general 
banking  law,  e.  g.,  the  tax  on  both  dividends  and  capital,  as  well  as 
various  other  burdens  and  restrictions.  —  See  Kept,  of  Bank  Commis- 
sioners, Dec.  17,  1843. 

104  Niles,  64:4,  Mar.  4,  1843. 

105  Niles,  63 :340,  Jan.  28,  1843. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    179 


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180  Ohio  Arch,  and  Hist.  Society  Publications. 

Expiration  of  Charters  of  Majority  of  Ohio  Banks  in  1843. 

On  January  i,  1843,  tne  charters  of  thirteen  of  the  Ohio  banks 
expired,107  and  two  more  expired  January  i,  1844,  leaving  only 
eight  in  the  state.  This  closed  the  period  of  banking  in  Ohio 
with  note  issue  based  on  general  assets,  and  consequently  one 
period  of  Ohio's  banking  history.  During  the  period  ending  at 
this  time  the  banks  were  organized  by  special  acts  of  the  legis- 
lature, which  granted  charters  for  specific  periods  of  time.  The 
system  had  proved  unsatisfactory,  not,  however,  because  the 
note-issues  were  based  upon  general  assets,  but  because  of  the 
practical  defects  of  a  lack  of  uniformity,  a  lack  of  any  adequate 
provision  for  redemption,  and  the  undue  expansion  of  credit 
upon  slender  resources.  These  were  errors  commonly  found  in 
new  countries.  They  were  in  large  part  due  to  the  frontier  con- 
ditions then  prevailing  in  Ohio  and  most  of  the  rest  of  the 
country.  The  economic  development  of  the  country  was  in  an 
experimental  stage,  and  the  rules  of  sound  banking  had  not  yet 
been  worked  out  even  in  the  older  countries  of  Europe,  much 
less  on  the  frontiers  of  the  Ohio  and  the  Great  Lakes.  A  new 
country,  as  Ohio  was  at  that  time,  poor  in  specie  and  in  loanable 
capital,  could  scarcely  be  expected  to  avoid  adopting  monetary 
devices  which  under  better  conditions  would  not  be  tolerated. 
During  most  of  the  period  distrust  had  been  general,  leading  to 
inconvenience  in  business  transactions.  There  being  no  security 
for  note  issue  except  general  assets,  when  a  bank  failed  its  notes 
were  usually  worthless.  The  failures  however,  were  not  always 
due  to  mismanagement.  Often  borrowers  could  not  pay,  and 
many  times  the  banks  were  not  able  to  realize  on  their  property. 
Many  of  the  banks  had  been  organized  for  purely  speculative 
purposes,  and  over-issue  was  frequent  though  by  no  means  uni- 


107  Referring  to  the  thirteen  banks  whose  charters  expired  January  1, 
1843,  the  Cincinnati  Gazette,  remarked  that  they  call  up  "the  pleasing 
associations  of  honesty,  sound  currency,  and  general  popularity";  that 
they  redeemed  all  their  notes  ever  issued ;  that  all  but  one,  the  Commercial 
Bank  of  Scioto,  promptly  met  their  engagements,  and  most  of  them  re- 
turned 100  cents  on  the  dollar  on  their  capital  stock,  and  some  much 
more.  At  least  one  of  them,  the  Farmers'  and  Mechanics'  Bank  of  Steu- 
benville,  did  not  suspend  specie  payment  in  1838  and  1839.  —  Bankers' 
Mag.,  4:296,  October,  1849. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    181 

versal.  The  people  of  the  state  knew  that  something  was  wrong 
with  their  banking  system,  and  note  issue  being  the  most  prom- 
inent function  of  banks  at  that  time,  they  concluded  that  the 
remedy  lay  in  adopting  a  new  system  wherein  the  note  issue 
should  not  depend  on  general  assets  alone,  but  should  be  secured 
by  a  safety  fund  or  a  deposit  of  bonds.  This,  however,  brings 
us  to  the  second  period  of  Ohio's  banking  history,  which  will 
be  treated  of  in  the  next  part  of  this  monograph. 


PART  II.     BANKING  IN  OHIO  UNDER 
GENERAL  LAWS.     1843-1863. 


NOTE  ISSUE  SECURED  BY  SAFETY  FUND 
OR  BOND  DEPOST. 

(183) 


CHAPTER  VIII. 
CONDITIONS  PRIOR  TO  1845. 

Specie-paying  Banks  in  Ohio  in  1843  and  1844.  —  Of  the 

twenty-three  paying  banks  in  Ohio  with  a  total  capital  of  $7,034,- 
083  in  December  1842,  the  charters  of  thirteen  expired  January 
i,  1843,  leaving  but  ten  authorized  banks  in  the  state.  The  cap- 
ital of  these  ten  banks  in  December  1843  was  $3459>773>  °f  which 
$1,673,872  was  owned  by  residents  of  the  state  and  $1,785,901 
by  non-residents.  The  charters  of  two  more  banks,  the  Bank 
of  Geauga  and  the  Commercial  Bank  of  Cincinnati,  expired 
January  i,  1844,  further  reducing  the  banking  capital  of  the  state 
by  $i,  155,02s.1  Thus  in  January  1844,  there  were  left  in  Ohio 
but  eight  authorized  banks  with  a  capital  of  $2,304,745.  The 
names  of  these  banks  and  the  dates  their  charters  were  to  expire 
are  shown  in  the  following: 


AUTHORIZED   BANKS   IN    OHIO   IN 

Termination 

Name.2  of  Charter. 

Bank   of   Xenia  ..........................................  May   1,  1850 

Bank   of    Sandusky  ......................................  May   1,  1850 

Bank  of  Wooster  ........................................  June  1,  1850 

Bank  of   Norwalk  .......................................  June  1,  1850 

Lafayette  Bank  of  Cincinnati  ............................  Jan.    1,  1854 

Clinton  Bank  of  Columbus  ..............................  Jan.    1,  1854 

Bank  of  Circleville  ......................................  Mar.  1,  1855 

Bank  of  Massillon  .......................................  June  1,  1855 


During  1843  an^  1844  these  banks  were  in  good  condition. 
They  were  prompt  in  meeting  their  engagements,  and  there  was 


'Ohio  Exec.  Doc.,  1843,  No.  38. 

2  Charters  of  first  five  contained  provisions  making  them  subject  to 
amendments  by  general  restrictions.  Charters  of  remainder  contained 
no  provisions  making  them  subject  to  legislation  by  amendment  except 
as  to  taxation  or  prohibition  of  issue  of  bills  under  $5.  —  Special  Report 
Bank  Commissioners,  Dec.  24,  1842. 

(185) 


186  Ohio  Arch,  and  Hist.  Society  Publications. 

but  little  speculation  in  real  estate  and  new  enterprises.  Most 
of  the  bank  loans  were  on  bills  payable  in  eastern  cities  and 
founded  on  some  actual  transaction.  Scarcely  a  bill  was  returned 
dishonored.  In  some  instances  accommodation  paper  was  dis- 
counted and  renewals  made  where  the  parties  were  unquestion- 
ably good,  but  probably  nine-tenths  of  the  loans  and  transactions 
were  confined  to  business  paper  and  the  purchase  of  bills  on  the 
actual  shipment  of  produce,  or  the  driving  of  stock  to  a  northern 
or  eastern  market.3 

Economic  conditions  in  the  State.  —  At  this  time  Ohio 
was  the  first  agricultural  State  in  the  Union.  The  completion 
of  the  Erie  and  the  Ohio  canals  had  given  interior  and  northern 
Ohio  access  to  markets  and  made  passible  diversification  of  ag- 
riculture and  industry.  In  1842  the  state  produced  1.2  million 
tons  of  hay,  5.3  million  pounds  of  tobacco,  7.3  million  bushels 
of  potatoes,  19.4  million  bushels  of  oats,  and  39.4  million  bushels 
of  corn,  besides  various  other  large  crops.  One  great  source  of 
wealth  in  the  state  was  the  production  of  wheat.  Of  the  102.3 
million  bushels  of  wheat  produced  in  the  United  States  that 
year,  Ohio  produced  about  25%,  or  25.4  million  bushels.  Her 
nearest  rivals  New  York  and  Pennsylvania  together  produced 
only  22  million  bushels,  while  the  next  two,  Indiana  and  Virginia, 
together  yielded  only  16  million  bushels.4 

The  raising  of  live  stock  was  also  an  industry  of  great  im- 
portance in  Ohio  during  this  period.  Before  the  opening  of  the 
canals  the  remoteness  from  markets  had  made  the  price  of  grain 
so  low  that  the  most  profitable  use  to  be  made  of  it  was  to  feed 
it  to  cattle,  horses,  and  hogs,  which  could  then  be  driven  on  foot 
to  distant  markets.  This  industry  was  still  an  extensive  one. 
One  of  its  centers  was  Ross  County  in  the  Scioto  Valley,  where 
the  stock  business  of  the  West  had  its  origin.6  Chillicothe  was 
the  county  seat  of  Ross  County.  Madison  County  also  was  es- 


3  Annual  Reports  of  Bank  Commissioners,   Dec.   17,  1843  and  Dec. 
16,  1844. 

4  Ohio  Exec.  Doc.,  1843,  No.  25,  pp.  10  and  11. 

5  Howe's  Historical  Collections  of  Ohio,  Vol.  II,  p.  511. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    187 

pecially  a  grazing  county,  where  for  years  prior  to  1856  large 
herds  of  cattle  were  raised  and  shipped  to  eastern  markets.6 

Cleveland's  position  on  Lake  Erie  at  the  end  of  the  Ohio 
Canal  and  at  the  meeting  of  important  stage  lines  between  the 
east  and  the  west  and  the  south  had  already  made  it  the  mart 
of  the  greatest  grain  growing  state  in  the  Union.  Its  business 
by  canal  and  lake  was  already  large  and  constantly  increasing. 
In  1840  more  than  2,000,000  bushels  of  wheat  had  arrived  at 
Cleveland  via  the  canal,  and  the  year  before  over  19,000,000 
pounds  of  merchandise  had  been  shipped  from  that  point  via 
the  canal.7  The  number  of  arrivals  by  lake  in  1845  was  2>X36, 
of  which  927  were  steamers.  The  tonnage  then  owned  at  this 
port  amounted  to  13,493,  and  the  total  annual  value  of  its  imports 
and  exports  by  the  lake  was  over  $9,ooo,ooo.8 

The  great  metropolis  of  the  state,  however,  was  then  Cin- 
cinnati. It  had  long  been  the  center  of  the  pork  packing  indus- 
try of  the  United  States  and  had  become  known  as  Porkopolis, 
a  name  it  retained  until  after  the  Civil  War  when  Chicago  be- 
came the  great  packing  center.  Cincinnati  was  also  a  center  of 
steam-boat  building  and  received  extensive  imports  of  goods  from 
the  east  and  exported  the  surplus  crops  of  the  two  Miami  Valleys 
in  Ohio  and  the  Licking  Valley  in  Kentucky.  It  was  already  an 
extensive  manufacturing  place  and  thousands  of  dollars  worth 
of  its  manufactured  goods  were  annually  sent  into  the  upper 
and  lower  Mississippi  country.9 

Exports  and  exchange  operations.  —  At  this  time  Ohio 
was  the  third  state  in  the  Union  in  population,  having  in  1840 
over  a  million  and  a  half  of  inhabitants.  Although  during  the 
preceding  decade  Ohio's  population  had  increased  62%,  or  nearly 
twice  as  fast  as  the  country  as  a  whole,10  yet  her  agriculture  and 
other  industries  had  developed  still  more  rapidly,  so  that  the 


"Ibid.,  p.  165. 

7  Ohio  Canals,  p.  175. 

8  Howe,  Vol.  I,  pp.  498  and  504. 
'Howe,  Vol.  I,  p.  758. 

10  See  page  125. 


188  Ohio  Arch,  and  Hist.  Society  Publications. 

state  had  a  large  surplus  to  export.     Her  exports  alone  now 
amounted  to  over  $20,000,000  a  year.11 

To  take  care  of  this  large  export  business  the  eight  au- 
thorized banks  remaining  in  the  state  had  near  the  close  of  1844 
a  capital  stock  of  $2,321,192  and  a  circulation  of  $2,260,403, 
coin  equivalent.12  The  export  transactions,  however,  were  ef- 
fected chiefly  by  bills  of  exchange,  thus  requiring  a  comparatively 
small  amount  of  capital.  The  bills  of  exchange  were  sold  to  the 
banks  for  bank  notes  and  the  proceeds  of  the  bills  after  payment 
constituted  a  fund  to  be  applied  to  the  redemption  of  the  cir- 
culation, or  an  eastern  fund  to  be  drawn  on  to  meet  the  interest 
of  the  state  debt,  or  to  supply  the  wants  of  merchants.  The 
amount  of  this  kind  of  paper  negotiated  through  the  state  each 
year  was  very  large.  One  northern  bank  in  1843  negotiated  bills 
of  exchange  amounting  to  $1,200,000  and  a  central  bank  $i,- 
000,000.  Additional  large  amounts  were  negotiated  by  other 
banks  and  by  individuals.  In  the  city  of  Cleveland  alone  the 
amount  was  $6,ooo,ooo.13 

Foreign  and  Unauthorized  Bank  Circulation.  —  That  the 
circulation  of  the  authorized  banks  was  not  sufficient  to  handle 
all  this  business  is  indicated  by  the  large  amount  of  foreign 
bank  paper  circulating  in  Ohio.  In  December  1844  this  was 
reported  by  the  bank  commissioners  at  $7,473,483,  much  of 
which  was  made  up  of  issues  of  doubtful  credit  and  suspicious 
origin.14  In  one  part  of  the  state  a  company  organized  as  a 
bank  was  engaged  in  the  purchase  of  depreciated  paper  with  the 
means  of  insolvent  bank,  and  then  forcing  this  paper  back  into 
the  hands  of  laboring  men  for  the  purpose  of  another  specula- 


11  Ohio  Exec.  Doc.,  1843,  No.  38. 

12  Annual  Report  Bank  Commissioners,  Dec.  16,  1844. 
"Annual  Report  Bank  Commissioners,  Dec.  17,  1843. 

In  Cincinnati  the  pork  packing  industry  each  winter  threw  into  the 
market  a  large  amount  of  these  bills.  After  the  season  closed  exchange 
on  New  York  was  likely  to  advance,  for  instance  in  February,  1844,  it 
was  1%  premium  while  a  short  time  before  it  had  been  at  a  discount. — 
Cincinnati  Morning  Herald,  Feb.  1,  1844. 

"Ohio  Exec.  Doc.,  1844,  No.  55. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War     189 

tion.15  There  also  existed  a  class  of  institutions  incorporated 
as  insurance  companies,  saving  institutes,  etc.,  which  assumed 
banking  powers,  not  only  of  loan  and  deposit,  but  also  of 
note  issue.  These  experimented  with  various  kinds  of  depre- 
ciated paper.  The  paper  of  one  institution  after  another  would 
be  adopted,  circulated,  and  repudiated.  They  would  buy  a  con- 
trolling stock  in  some  doubtful  or  insolvent  bank  in  a  distant  or 
adjoining  state  and  force  its  paper  into  circulation.  This  vitiated 
paper  would  be  quoted  at  par  by  some  hired  press,  and  its  credit 
and  circulation  be  kept  up  as  long  as  found  profitable.16 

Inadequate   Banking   Facilities  and   Low   Prices.  —  The 

statistics  of  the  authorized  banks  in  Ohio  in  1843  and  1844  show 
the  lowest  figures  for  more  than  a  decade.  Loans  and  discounts, 
which  were  over  13  million  dollars  in  1840,  were  less  than  3  mil- 
lion in  1844;  specie  declined  from  1750  thousand  in  1840  to  less 
than  750  thousand  in  1844;  capital,  which  was  ioj^  millions  in 
1840,  was  only  2  1/6  million  in  1844;  circulation,  which  was  4.6 
million  in  1840  and  over  8  million  in  1839,  dropped  below  2 
million  in  1843  and  was  only  2.2  million  in  1844;  while  the  de- 
posits, which  were  still  over  2  million  in  1840,  went  down  to  half 
a  million  at  the  beginning  of  1844  and  were  only  436  thousand 
at  the  end  of  that  year.17 

This  decline  appears  greater  yet  if  we  compare  the  figures 
in  1843  and  1844  with  those  of  1836  and  1837,  and  it  may  be 
said  that  never  since  1844  have  the  figures  been  so  low.  The 
prices  of  Ohio  products  were  also  very  low  in  1843  and  1844, 
though  not  generally  so  low  as  in  1842.  Thus  in  Cincinnati  in 
1843  flour  was  $3.62  a  barrel  as  compared  with  $2.62  in  1842, 


15  Ohio  Exec.  Doc.,  1843,  No.  38. 

The  company  referred  to  was  reported  as  the  Traders'  and  Me- 
chanic's Bank  of  Cincinnati,  and  the  Urbana  Banking  Co.,  was  the  insol- 
vent bank.  —  Report  Bank  Commissioner  to  Senate,  Feb.  27,  1844. 

16  Ibid.     The   above    report   names   as    an    example    of    this    sort   of 
thing  the  Mechanics'  Saving  Institution  of  Columbus,  and  recommends  a 
law   providing   examination   of    savings    institutions    and    insurance    Com- 
panies by  public  officers. 

"Report  of  the  Comptroller  of  the  Currency,  1876,  p.  CXVII. 


190  Ohio  Arch,  and  Hist.  Society  Publications. 

while  pork  opened  the  season  of  1843-4  at  $2.25  to  $2.65  a  hun- 
dred as  compared  with  $1.62  to  $2.00  the  previous  season.18 

It  does  not  appear,  however,  that  in  these  respects  Ohio  was 
much  worse  off  than  the  rest  of  the  country.  The  years  1843 
and  1844  were  a  period  of  low  prices  throughout  the  United 
States  with  a  slight  revival  of  industry  in  the  latter  year.19  While 
for  the  entire  United  States  the  statistics  of  the  state  banks  show 
in  1843  the  lowest  loans,  deposits,  and  circulation  for  ten  years,  the 
capital  being  the  lowest  in  1842  and  the  specie  continuing  to 
decline  until  it  reached  the  lowest  point  in  i846.20 

Private  Capital  in  the  State.  —  In  Ohio,  moreover,  though 
the  specie  in  the  banks  was  very  low  during  the  years  1843  an<^ 
1844,  there  was  considerable  specie  in  private  hands.  In  Stark 
county,  for  example,  after  the  resumption  of  specie  payments 
during  six  months  probably  $150,000  in  specie  was  paid  out  for 
wheat  alone,  perhaps  one-half  of  which  remained  in  the  county; 
while  at  Milan  during  three  weeks  in  the  summer  of  1843  some 
$700,000  was  paid  out  for  wheat  and  flour,  though  purchasers 
of  produce  mostly  drew  on  New  York  houses  at  sight  or  at  30 
and  60  days.  All  this  went  into  the  pockets  of  the  farmers  of 
Richland  and  Knox  countries,  except  a  small  fraction  to  a  few 
farmers  in  Delaware,  Marion,  and  Crawford  counties.  The 
bank  commissioners  estimated  that  thus  much  more  than  10  mil- 
lion dollars  was  annually  brought  and  paid  out  in  the  state ;  so 
that  when  there  was  added  the  amount  in  the  hands  of  merchants 
and  retired  business  men,  the  private  capital  aggregated  from 
15  to  30  million  dollars.  A  large  part  of  this  they  considered  to 
be  in  coin.21 

This  estimate  was  probably  too  high,  as  the  total  amount 
of  money  in  the  United  States  in  1843  was  reported  as  only  148.6 
million  dollars  of  which  nearly  40%  was  estimated  as  bank 


18  Cincinnati  Daily  Enquirer,  Feb.  23,  1846. 

Report  of  Ohio  Commissioner  of  Statistics,  1859,  p.  96. 
See  also  Appendix,  p.  291. 

19  Industrial  Depressions  —  Hull,  p.  144. 

20  Report  of  the  Comptroller  of  the  Currency,  1876,  pp.  XCIV  and 

xcv. 

21  Reports  of  Bank  Commissioners,  Dec.  17,  1843  and  Feb.  27,  1844. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    191 

notes.22  The  Lafayette  Bank  of  Cincinnati  in  reply  to  questions 
of  the  bank  commissioners  in  1844  stated  that  specie  then  formed 
but  a  small  part  of  the  circulating  medium  in  Cincinnati;  that  at 
least  four-fifths  of  the  whole  circulation  of  bank  paper  was 
furnished  by  institutions  out  of  Ohio ;  while  there  was  less  specie 
in  the  state  then  than  at  any  period  for  fifteen  years.28 

Objections  to  the  general  banking  law  of  1843.  —  During 
the  winter  of  1842-3  there  had  been  much  complaint  of  the 
scarcity  of  money  in  Ohio,24  and  the  state  legislature  had  con- 
sumed much  time  in  the  discussion  and  examination  of  the  bank- 
ing question.  The  discussion  centered  largely  upon  the  two  prin- 
ciples of  the  security  of  the  bill  holders  and  the  convertibility  of 
paper  at  all  times  into  gold  and  silver.  In  view  of  the  excess  of 
issues  and  loans  over  the  capital  stock  paid  in,  and  consequently, 
the  great  percentage  arising  to  corporate  as  compared  with 
private  business,  the  legislature  decided  in  favor  of  personal 
liability.25  This  had  been  the  strong  feature  of  the  general  bank- 
ing law  passed  March  7,  i842,26  and  was  retained  when  that  law 
was  amended  February  21,  i843.27 

Although  this  act  enabled  the  old  banks  whose  charters  had 
expired  to  reorganize  under  general  law,  none  of  them  took  ad- 
vantage of  the  opportunity  notwithstanding  the  great  demand 
for  currency.  Their  chief  objections  may  be  stated  as  follows: 
( i ) .  The  tax  levied  upon  the  dividends  and  also  upon  the  capital 
stock.  (2).  The  expense  of  registering  the  notes  they  would 
be  authorized  to  issue,  and  the  expense  of  supporting  a  board  of 
bank  commissioners.  (3).  The  requirement  that  in  case  of 
complaint  the  commissioners  should  proceed  to  close  a  bank  on 
the  loss  of  one-fifth  of  its  capital.  (4).  The  penalty  and  pro- 
hibition against  selling  any  of  the  gold  or  silveir  belonging  to  the 
bank.  (5).  The  clause  forbidding  the  holding  or  the  purchase 
of  any  real  estate,  especially  when  the  bank  should  be  the  judg- 
ment creditor  and  there  was  no  other  property  to  satisfy  the  debt. 


22  Report  of  Comptroller  of  the  Currency,  1908,  p.  145. 
33  Ohio  Exec.  Doc.,  1844,  No.  55. 

24  Niles,  63  :340,  Jan.  28,  1843. 

25  Ohio  Exec.  Doc.,  1843,  No.  38. 
*  See  p.  177. 


192  Ohio  Arch,  and  Hist.  Society  Publications. 

(6).  Not  being  allowed  to  receive  stock  in  payment  of  debts. 
(7).  The  right  retained  by  the  legislature  to  amend  or  annul 
the  law.27 

Agitation  for  a  new  Banking  Law.  —  In  the  fall  elections 
of  1843  the  subject  of  "Banks  or  No  Banks"  was  one  of  the 
main  questions.  The  Whigs,  who  favored  a  bank  currency,  car- 
ried the  legislature,28  and  during  the  following  session  a  bill  was 
introduced  to  establish  the  Bank  of  Ohio  with  a  capital  of  $10,- 
000,000  to  be  distributed  to  branches  by  a  board  of  five  state 
commissioners.29  Nothing  was  accomplished,  however,  during 
that  session,  and  during  the  summer  and  fall  the  Ohio  news- 
papers devoted  much  space  to  discussion  of  bank  projects.  The 
question  seemed  to  be  between  free  banking,  based  on  a  pledge 
of  Ohio  stocks,  a  safety  fund  similar  to  the  New  York  plan,  and 
the  old  plan  of  depending  on  a  specie  basis.30 

Difference 'of  Opinion  as  to  System,  needed.  —  The  gov- 
ernor of  the  state  Thomas  W.  Bartley,  a  Democrat,  in  his  mes- 
sage of  December  3,  1844,  discussed  the  banking  situation  at 
length  and  strongly  opposed  the  proposition  for  a  state  bank 
with  capital  to  be  invested  in  state  stocks.  "Of  all  the  schemes 
for  banking  which  have  been  devised,"  said  he,  "this  is  the  most 
objectionable  and  the  most  dangerous  in  its  tendencies  to  the 
independence  and  purity  of  the  government  and  the  liberties  of 
the  people. — It  proposes  a  union  of  bank  and  state — the  for- 
mation of  an  incestuous  and  unholy  coalition  between  an  organ- 
ized, combined  monied  interest,  and  the  civil  power  upon  which 
the  people  depend  for  the  safety  of  their  liberties."  The  plan, 
he  objected,  would  perpetuate  the  state  debt,  and  render  the  state 
the  slave  of  the  monied  interest.31 

Governor  Mordecai  Bartley,  a  Whig,  in  his  inaugural  ad- 
dress the  same  day  advocated  a  free  banking  system  with  notes 


"Annual  Report  of  Bank  Commissioners,  Dec.  17,  1843. 
^Niles,  65:144,  Oct.  28,  1843. 
29  Ibid.,  66 :7,  Mar.  2,  1844. 
30Niles,  67:192,  Nov.  23,  1844. 
3]  Ohio  Exec.  Doc.,   1844,  No.  1. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    193 

secured  by  a  deposit  of  state  stocks  and  providing  for  examina- 
tions and  other  safeguards.32 

In  the  fall  elections  of  1844  the  bank  party  had  carried  the 
day  in  every  department  of  the  state  government,  and  the  subject 
occupied  a  large  portion  of  the  legislative  session.  A  majority 
of  the  legislature  favored  establishing  banks,  but  there  was  much 
difference  of  opinion  as  to  what  system.  It  was  difficult  to  ad- 
just any  plan  that  could  obtain  a  majority  of  the  votes,  es- 
pecially as  a  formidable  minority  stood  regularly  opposed  to 
any  project.33 

Kelley's  Bank  Bill  in  the  Legislature.  —  On  Jan.  7,  1845, 
however,  the  chairman  of  the  Currency  Commission,  Alfred 
Kelley,  introduced  into  the  senate  a  bill  which  incorporated  fea- 
tures of  several  of  the  systems  that  were  advocated.  The  com- 
mittee in  reporting  the  bill  said:34 

'The  committee  entertains  no  doubt  that  a  very  large  ma- 
jority of  the  people  of  the  State  anxiously  desire  the  enactment, 
by  the  present  General  Assembly,  of  some  law  authorizing  the 
establishment  of  banks  which  will  furnish  them  with  a  safe  and 
convenient  currency,  afford  reasonable  facilities  for  obtaining 
money  to  meet  the  wants  of  commercial  and  manufacturing 
operations,  and  at  the  same  time  hold  out  proper  inducements  to 
those  who  have  money  to  invest  in  banking  institutions. — In  fram- 
ing this  bill  the  committee  have  constantly  in  view  the  great 
landmarks  of  entire  security  to  the  bill  holder,  reasonable  se- 
curity to  dealers  with  the  banks,  and  proper  inducements  to  the 
capitalist,  whether  great  or  small,  to  invest  his  disposable  means 
in  banking." 

This  bill  aimed  to  include  the  advantages  of  a  safety  fund, 
a  bond  secured  circulation,  and  a  sort  of  state  bank,  and  pro- 
vided for  a  capital  of  $6,000,000  in  addition  to  that  of  the  ex- 
isting banks.  The  measure  was  discussed  until  the  last  day  of 


32  Old  School  Republican  and  Ohio  State  Gazette,  Dec.  5,  1844. 
Niles,  67:323,  Jan.  25,  1845. 

33  Niles,  67:368,  Feb.  8,  1845. 
"Knox,  p.  679. 

Niles,  67:336,  Jan.  25,  1845. 

13 


194  Ohio  Arch,  and  Hist.  Society  Publications. 

January,  being  'before  the  senate  seventeen  different  days.  It 
met  with  determined  opposition  from  the  Democrats,  but  finally 
passed  the  senate  by  a  vote  of  21  to  15,  a  strictly  partisan  vote. 
On  February  i,  the  bill  was  first  read  in  the  house  where  it  met 
the  same  opposition.35  After  being  before  the  house  on  nine 
separate  days  it  was  passed  on  February  12.  On  the  amendments 
it  was  before  the  senate  eight  times  and  the  house  four  times 
before  it  was  finally  passed  in  the  house  by  a  party  vote  of  40 
to  3O.3T  The  bill  was  signed  by  the  president  of  the  senate  and 
the  speaker  of  the  house  on  February  24,  1845,  and  was  en- 
titled "An  Act  to  incorporate  the  State  Bank  of  Ohio  and  other 
banking  companies."38  This  act  repealed  the  laws  of  March 
7,  1842  and  February  21,  1843,  and  became  the  general  law 
which  dominated  Ohio's  banking  system  for  the  next  twenty 
years. 


85  Dayton  Journal,  Feb.  5,  1845. 

Such  phrases  as  the  following  were  commonly  used  by  opponents  of 
the  bill:  "combination  of  disjointed  shapes,"  "sub-potentates  of  the  paper 
money  dynasty,"  "bank  rulers  to  domineer  over  and  plunder  us  to  their 
hearts'  content,"  "the  abominable  shinplaster  tyranny."  —  Cincinnati  Daily 
Enquirer,  Feb.  6,  1845. 

37  State  Bank  of  Ohio  —  J.  J.  Janney  in  Magazine  of  Western  Hist., 
Vol.  II,  p.  159. 

38  Laws  of  Ohio,  Vol.  43,  p.  24. 


CHAPTER  IX. 
THE  STATE  BANK  OF  OHIO  AND  INDEPENDENT  BANKS. 

The  General  Banking  Law  of  Feb.  24,  1845.  —  This  law  in 
addition  to  recognizing  the  old  banks  still  existing  provided  for 
the  organizing  of  two  new  classes :  the  State  Bank  of  Ohio,  and 
Independent  Banks.1 

Five  persons  or  more  might  form  a  banking  company,  but 
the  aggregate  capital  stock  of  all  such  banks  should  not  exceed 
$6,150,000,  in  addition  to  the  capital  of  any  existing  banks  that 
might  be  authorized  to  continue  subject  to  the  provisions  of  the 
act.2  That  the  privileges  of  the  act  might  not  be  monopolized 
the  state  was  divided  into  twelve  districts  and  the  number  of 
banks  in  each  limited.3 

Persons  organizing  a  bank  were  required  to  make  a  cer- 
tificate specifying  the  name  of  the  company,  the  amount  of  its 
stock,  and  the  number  of  shares  held  by  each  member  at  the 
time  of  organization.  A  board  of  bank  commissioners  was  pro- 
vided to  examine  all  applications  for  the  establishment  of  banks,4 

1  Laws  of  Ohio,  Vol.  43,  pp.  24-54. 

2  The  Bank  of  Geauga,  Western  Reserve  Bank,  Columbiana  Bank  of 
New  Lisbon,  Lafayette  Bank  of  Cincinnati,  and  the  Ohio  Life  Insurance 
and  Trust  Co.,  were  specially  authorized  on  certain  conditions  to  reor- 
ganize with  such  an  amount  of  stock  as  their  directors  might  determine; 
the  two  latter,  however,  being  restricted  to  not  less  than  $300,000  each 
nor  more  than  $1,000,000,  and  their  circulation  should  not  exceed  $650,000 
each. 

3  Hamilton  county  was   allowed  4  banks,   Cuyahoga   6,   Franklin  3, 
Ross  2,  Muskingum  2,  Jefferson  2,  Summit  3,  Lucas  2,  Miami  2,  Mont- 
gomery 2,  and  no  other  county  over  one. 

*  The  act  named  John  W.  Allen,  Joseph  Olds,  Daniel  Kilgore,  Alex- 
ander Grimes,  and  Gustavus  Swan  to  serve  for  one  year,  after  which 
the  Auditor,  Treasurer,  and  Secretary  of  State  should  constitute  the 
commissioners. 

By  the  act  of  Jan.  6,  1846,  the  duties  of  the  bank  commissioners 
were  given  to  the  board  of  control  so  far  as  they  related  to  banks  elect- 
ing to  become  branches  of  the  State  Bank.  —  Laws  of  Ohio,  Vol.  44, 
p.  8. 

(195) 


196  Ohio  Arch,  and  Hist.  Society  Publications. 

and  the  capital  stock  of  each  bank  was  limited  to  not  over 
$500,000,  while  it  must  be  at  least  $50,000  for  each  independent 
bank  and  $100,000  for  each  branch  of  the  State  Bank.  At 
least  30%  of  the  capital  stock  was  to  be  paid  in  gold  or  silver 
coin  or  its  equivalent. 

Provisions  relating  to  the  State  Bank.  —  When  seven 
branches  should  be  formed  they  were  to  appoint  members  of  a 
Board  of  Control  to  meet  in  Columbus.  The  act  did  not  provide 
for  a  central  bank.  The  banking  business  was  to  be  carried  on 
exclusively  by  the  'branches,  and  each  branch  was  authorized  to 
appoint  one  member  of  the  board  of  control.  This  board  was 
authorized  to  procure  and  furnish  notes  for  the  branches,  to  pre- 
scriber  rules  for  the  settlement  of  balances  between  branches,  to 
visit  and  examine  branches,  to  require  any  branch  to  reduce  its 
circulation  or  other  liabilities,  to  require  from  any  branch  sworn 
statements  of  its  condition  in  such  form  and  at  such  times  as  the 
board  should  see  fit.  The  compensation  of  the  board  and  the 
expense  of  printing  the  notes  were  to  be  paid  by  the  branches, 
the  latter  in  the  ratio  of  the  notes  received  by  each  branch. 

All  notes  issued  by  any  branch  were  to  be  made  payable  at 
the  branch  on  demand  in  gold  or  silver  coin,  the  lawful  cur- 
rency of  the  United  States,  or  either,  at  the  option  of  the  branch. 
The  amount  of  circulation  permitted  was  fixed  in  proportion  to 
the  capital  stock.  A  branch  could  issue  on  its  capital  up  to  one 
hundred  thousand  dollars,  twice  that  amount  of  notes ;  on  the 
second  hundred  thousand,  one  and  one-half  times  the  amount; 
on  the  third  hundred  thousand,  one  and  a  quarter  times  the 
amount;  on  the  fourth  hundred  thousand,  once  the  amount;  and 
on  any  amount  over  four  hundred  thousand,  not  over  three- 
fourths  that  amount.  It  could  also  issue  notes  equal  in  amount 
to  its  safety  fund. 

Each  branch  was  required  to  pay  over  to  the  board  of  con- 
trol ten  per  cent  on  the  amount  of  notes  it  received  for  circulation 
as  a  Safety  Fund.  This  safety  fund  was  then  to  be  invested  in 
stock  of  the  State  or  of  the  United  States,  or  in  first  mortgage 
real  estate  bonds  of  twice  the  value  of  the  amount  secured,  the 
branches  to  receive  interest  on  the  same.  The  stockholders  col- 
lectively of  any  branch  should  not  be  liable  as  debtors  or  sureties 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    197 

to  such  branch  for  an  amount  over  one-third  the  capital  stock 
paid  in  and  remaining;  nor  the  directors  collectively  for  more 
than   one-fourth   the   capital   actually   paid   in   and   standing   in- 
their  names. 

When  any  branch  should  refuse  to  redeem  its  notes,  it  was 
to  be  considered  insolvent  and  the  board  of  control  was  to  ap- 
point a  receiver.  In  case  of  insolvency  each  solvent  branch  was 
required  to  contribute  in  proportion  to  its  circulation  to  a  fund 
for  redeeming  the  notes  of  the  failing  branch,  to  be  repaid  from 
a  sale  of  stocks  in  the  safety  fund. 

Provisions  relating  to  Independent  Banks.  —  The  security 
of  the  notes  issued  by  the  independent  banks  rested  on  a  dif- 
ferent basis.  Each  independent  bank  must  deposit  with  the  state 
treasurer  stock  of  the  State  or  of  the  United  States  at  least  equal 
in  amount  to  its  capital  stock.  The  treasurer  was  authorized 
to  procure  the  necessary  engraved  plates  and  issue  to  each  branch 
notes  for  circulation  not  exceeding  the  amount  of  stock  it  de- 
posited, the  expense  of  the  same  to  be  paid  out  of  the  state 
treasury.  The  treasurer  was  also  to  give  new  notes  for  mu- 
tilated ones  and  burn  the  latter.  The  banks  were  to  receive  the 
interest  on  the  stock  deposited  except  when  such  stocks  should 
go  below  par  for  four  consecutive  weeks  or  the  bank  fail  to  re- 
deem its  notes.  If  any  independent  bank  should  fail  to  redeem 
its  notes,  the  treasurer  was  to  sell  the  stock  deposited  by  such 
bank  and  from  the  proceeds  pay  in  ratable  proportion  such  of 
its  circulating  notes  as  should  be  presented  at  the  treasury. 

The  stockholders  collectively  of  any  independent  bank  must 
not  be  liable  to  the  bank  to  any  amount  over  three-fifths  of  the 
capital  paid  in,  nor  the  directors  liable  for  more  than  an  amount 
specified  in  the  by-laws  of  the  company.  An  examination  of 
each  independent  bank  was  to  be  made  at  least  once  a  year  by  a 
person  in  its  vicinity,  not  a  bank  stockholder,  who  was  to  be  ap- 
pointed by  the  auditor,,  treasurer,  and  secretary  of  state. 

General  Provisions  of  the  Law.  —  All  banks  organized 
under  this  law  were  made  bodies  corporate  until  May  I,  1866, 
and  thereafter  until  their  affairs  should  be  closed  up;  but  any 
branch  of  the  state  bank  might  close  up  its  business  sooner  with 
the  consent  of  the  board  of  control.  Notes  could  be  issued  in  de- 


198  Ohio  Arch,  and  Hist.  Society  Publications. 

nominations  of  one,  two,  three,  five,  ten,  twenty,  fifty,  and  one 
hundred  dollars;  but  the  percentage  of  those  of  ten  dollars  and 
under  was  limited.  No  other  forms  of  paper  could  be  circu- 
lated. Independent  banks  were  required  to  redeem  each  other's 
notes  without  discrimination.  Each  bank  was  required  to  keep 
on  hand  at  all  times  in  gold  or  silver  or  its  equivalent  an  amount 
equal  to  30%  of  its  outstanding  notes. 

Dividends  must  be  paid  from  net  profits  only,  and  at  fixed 
times;  6%  of  the  amount  was  to  be  set  off  to  the  state  in  lieu 
of  taxes;  and  the  dividends  of  stockholders  in  debt  to  the  bank 
were  to  be  retained  and  applied  to  the  debt.  Six  per  cent  in- 
terest only  could  be  charged  on  loans,  and  the  amount  that  might 
be  loaned  to  any  one  person  or  firm  was  limited.  The  liabilities 
of  each  bank  were  also  limited,  and  statements  of  condition  must 
be  made  twice  each  year  and  filed  with  the  auditor  of  state. 

Meeting  of  Board  of  Bank  Commissioners.  —  At  first 
there  was  much  questioning  among  the  people  of  the  state  as 
to  the  prospect  of  capitalists  making  investments  under  the  new 
banking  law;  but  it  quickly  became  evident  that  they  regarded 
its  provisions  with  favor,  that  banks  would  soon  be  organized, 
and  that  a  new  currency  would  be  emitted  in  time-  to  purchase 
the  produce  of  that  season.5  On  March  18,  1845,  pursuant  to 
a  notice  from  the  governor,  the  board  of  bank  commissioners 
named  in  the  law  met  at  Columbus  to  act  upon  applications  from 
banks  organized  under  the  act,  and  take  the  initiatory  steps  to 
put  them  into  operation.6  By  June  19  application  had  been  filed 
and  proper  examinations  made  for  two  branch  banks  in  Cin- 
cinnati and  one  each  in  Xenia,  Dayton,  Chillicothe,  Delaware, 
and  Columbus. 

Organization  of  the  Board  of  Control.  —  This  being  the 
number  required  by  the  law  to  organize  the  state  bank,  they 
were  each  notified  to  elect  a  member  of  the  board  of  control;  and 
on  July  15  the  board  met  in  Columbus,  and  organized  the  next 
day  with  members  from  nine  branches.  Gustavus  Swan  was 
elected  president  of  the  board  and  James  T.  Claypoole  secretary. 


6  Dayton  Journal,  Apr.  4,  1845. 
6  Niles,  68 :54,  Mar.  29,  1845. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    199 

The  salary  of  the  president  was  fixed  at  $1,000  and  that  of  the 
secretary  at  $800  a  year.  At  this  same  meeting  an  executive 
committee  of  four  members  was  appointed,  and  a  committee  of 
the  same  number  to  secure  the  engraving  of  plates  for  notes. 
Alfred  Kelley,  the  author  of  the  law,  was  a  member  of  both  these 
committees.7 

Formation  of  New  Banks.  —  In  September  it  was  reported 
that  ten  branches  of  the  state  bank  were  already  in  operation,8 
and  before  the  close  of  the  year  six  more  were  added  to  the 
number.  Meanwhile  some  of  the  old  banks  whose  charters  had 
expired  were  taking  advantage  of  the  part  of  the  law  which 
permitted  them  to  become  independent  banks.9  The  first  inde- 
pendent bank  in  Ohio  was  the  Commercial  Bank  of  Cincinnati. 
It  was  organized  April  15,  1845.  Two  more  followed  July  i. 
another  in  September,  and  one  in  October,  making  five  independ- 
ent banks  in  the  state  before  the  end  of  i845.10  Thus  in  less 
than  a  year  the  number  of  banks  in  Ohio  had  increased  from 
eight  to  twenty-nine.  „ 

Effect  of  Increase  in  Banking  Facilities.  —  An  idea  of  how 
this  remarkable  growth  in  banking  facilities  was  regarded  by  the 
majority  of  the  people  in  the  state  may  be  obtained  from  the 
governor's  message  to  the  legislature  December  2,  1845.  "This 
new  Banking  Law  was  deliberately  enacted,  after  ample  con- 
sideration, and  a  faithful  examination  of  other  systems  which 
had  been  tested.  Thus  far  the  system  has  proved  to  be  equal  to 
the  anticipations  of  its  friends,  and  the  necessities  of  the  people 


7  The  two  additional  branches  were  the  Merchants'  Branch  of  Cleve- 
land, and  the  Exchange  Branch,  Columbus.  —  State  Bank  of  Ohio  —  Jan- 
ney,  p.  160. 

Judge  Swan  resigned  as  president  of  the  board  of  control  Novem- 
ber 21,  1854,  and  was  succeeded  by  Dr.  John  Andrews,  then  president  of 
the  Jefferson  branch,  who  served  until  November,  1866.  The  next  presi- 
dent was  Joseph  Hutcheson  of  Columbus,  who  filled  the  office  until  May, 
1870,  when  the  board  adjourned  sine  die,  after  electing  J.  Twing  Brooks 
president.  —  Ibid.,  p.  174. 

8  Dayton  Journal,  Sept.  15,  1845. 
"Niles,  68:176,  May  17,  1845. 

10  Ohio  Exec.  Doc.,  Part  II,  1853,  p.  326. 

For  the  names  of  these  banks  see  Appendix,  pp.  293  and  294. 


200  Ohio  Arch,  and  Hist.  Society  Publications. 

of  the  state."  "And  already  the  people  of  Ohio  begin  to  feel 
the  influence  of  this  system  in  the  restoration  of  confidence,  the 
revival  of  business,  the  increase  of  the  wages  of  labor,  and  the 
rising  prosperity  of  the  state."  11 

Opposition  to  the  new  Law  in  1845  and  1846.  —  Some, 
however,  did  not  take  so  optimistic  a  view  of  the  matter.12  No 
sooner  had  the  law  been  passed  than  the  anti-bank  party  an- 
nounced their  determination  to  carry  the  question  once  more  be- 
fore the  people  of  the  state.  Meetings  were  held  in  nearly  every 
county  and  electioneering  was  done  on  the  distinct  issue  of  repeal 
of  the  new  banking  law.  The  advocates  of  the  banks  accepted 

[ssuey  The  result  of  the  election  was  again  in  favor  of  the 
advocates  of  the  banks.13 

In  1846  the  fight  was  renewed.  The  Whig  state  convention 
was  unanimous  in  its  resolution  favoring  a  "sound  banking  sys- 
tem," opposing  the  repeal  of  the  existing  law,  and  opposing  an 
exclusively  hard  money  currency.  The  Democratic  convention, 
however,  was  divided  between  the  "hards"  and  the  "softs",  that 


"Cincinnati  Daily  Enquirer,  Dec.  4,  1845. 

Ohio  Exec.  Doc.,  1845,  No.  1,  p.  5. 

12  A  writer  in  a  Dayton  paper  discussing  the  Dayton  Bank,  an  inde- 
pendent bank,  asks :  "How  has  the  circulating  medium  here  been  bene- 
fited by  the  transmission  of  nearly  the  whole  circulation  of  this  bank  to 
neighboring  counties  and  states  ?"  —  Cincinnati  Daily  Enquirer,  Nov.  8, 
1845, 

/"Niles,  68:326,  July  26,  1845.    Also  69:143,  Nov.  1,  1845. 

As  an  example  of  the  campaign  appeals  the  following  quotations  are 
taken  from  resolutions  unanimously  adopted  by  the  Democratic  county 
convention  in  Hamilton  County  August  30,  1845 : 

"Resolved  that  the  corporate  privilege  of  concentrated  means,  limited 
liability,  and  protracted  succession  beyond  the  casualties  and  conditions  of 
individual  action  ought  not  to  be  conferred  on  money." 

"Resolved  that  metallic  currency  has  been  tested  by  the  experience 
of  ages.  On  the  contrary  all  systems  of  paper  currency  ever  yet  con- 
trived have  failed,  and  in  their  inevitable  overthrow  have  entailed  more 
distress  and  loss,  and  perpetrated  more  robbery  and  fraud  than  would 
colonize  a  continent  with  convicts  and  paupers.  Nor  have  we  seen  in 
the  Whig  legislature  of  last  year  any  symptoms  of  a  wisdom  superior  to 
the  paper-mongers  who  have  gone  before  them  —  but  a  compound  rather 
of  all  the  shallow  schemes  of  their  predecessors."  —  Reports  on  Finance, 
1845,  p.  553. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    201 

between  the  hard-money,  anti-bank  men  and  those  who  fav- 
:d  granting  bank  charters;  the  former  faction  won,  but  there 
was  considerable  disaffection.14  When  the  election  was  over  it 
was  found  that  the  Whigs  had  once  more  won,  Governor  Bebb 
receiving  a  larger  plurality  than  his  predecessor  two  years 
before.15 

The  safety  and  utility  of  the  new  system  having  been  tested 
tor  two  years,  and  the  people  having  twice  at  the  ballot  box  pro- 
nounced in  its  favor,  the  governor  seemed  justified  in  remarking 
in  his  message :  "No  longer  can  public  sentiment  on  the  subject 
be  misunderstood. "^  He  was  backed  by  public  opinion  when  he 
added :  "The  new  banking  system  *  *  *  has  thus  far  been 
successful  in  accomplishing  these  beneficial  purposes  of  its 
creation. 

"The  currency  of  the  State  has  been  restored  and  is  now  in 
a  more  safe  and  sound  condition  than  at  any  former  period. 
Want  of  confidence  and  alarm  are  no  longer  felt  among  those 
who  are  engaged  in  commercial  affairs  in  this  State."16 

Increase  of  Bank  Circulation  and  Prices,  —  In  February 
1846,  there  were  in  Ohio  31  banks:  8  old  banks,  7  independent 
banks,  and  16  branches  of  the  state  bank.  The  total. capital  was 
$3,848,918  while  the  circulation  was  $4,505,89 1.17  At  the  begin- 
ning of  the  previous  year  there  had  been  but  eight  banks  in  the 
state  with  a  capital  of  $2,321,192  and  a  circulation  of  $2,260,- 
403-18 

It  is  interesting  in  connection  with  this  increase  of  circula- 
tion to  compare  some  prices  of  Ohio  products  at  Cincinnati  for 
December,  1844,  and  December,  1845.  The  price  of  wheat  had 
increased  from  70  to  90  cents  a  bushel ;  flour  from  $3.70  to  $5.00 


</14Niles,  70:20,  Mar.  14,  1846. 

15  Ohio  Statistics,  1904,  p.  485. 

Wm.  Bebb  was  formally  attorney  for  the  old  Bank  of  Hamilton. 
Its  former  president,  John  Woods,  was  elected  State  Auditor.  —  Ohio 
Press,  Sept.  12,  1846. 

16  Message  of  Governor  M.  Bartley,  Dec.  8,  1846. 
Bankers'  Magazine,  1 :434. 

Ohio  Press,  Dec.  8,  1846. 

"Auditor's  Report,  Feb.  27,  1846. 

18  Figures  for  December,  1844.     See  pp.  185,  283. 


202  Ohio  Arch,  and  Hist.  Society  Publications. 

a  barrel;  hogs  from  $2.60  to  $4.37  a  hundred;  mess  pork  from 
$8  to  $12  a  barrel;  and  lard  from  4*4  to  7^2  cents  a  pound.19 
This  rapid  rise  in  prices  may  not  have  been  chiefly  due  to  the 
increased  circulation,  as  there  was  a  similar  rise  throughout  the 
country,20  but  so  also  was  there  an  increased  circulation  of  bank 
notes  in  the  country  as  a  whole  from  1844  to  1845. 

Anyway  the  friends  of  the  new  banking  system  in  Ohio 
seized  upon  the  coincidence  as  an  evidence  of  the  beneficial  in- 
fluence of  the  system  on  business  and  prosperity,  and  most  of  the 
people  seemed  to  believe  the  evidence.  The  results  of  the  opera- 
tion of  the  system  so  far  seemed  to  indicate  that  two  of  the 
objects  in  the  minds  of  the  framers  of  the  act  had  been  accom- 
plished, namely  to  "afford  reasonable  facilities  for  obtaining 
money  to  meet  the  wants  of  commercial  and  manufacturing 
operations,  and  at  the  same  time  hold  out  proper  inducements 
to  those  having  money  to  invest  in  banking  institutions." 

Distribution  of  Banking  Facilities  throughout  the  State. 

—  Another  object  proposed  to  be  attained  by  the  authors  of  the 
law  was  "the  securing  to  the  several  sections  of  the  State  a 
fair  participation  in  the  privileges  granted  by  the  act."22  This, 
of  course,  was  a  matter  which  involved  changes  from  time  to 
time  as  towns  grew  into  cities  and  new  industrial  and  commercial 
developments  took  place  in  certain  localities,  but  its  operation 
after  two  years  of  the  new  system  may  be  seen  from  the  dis- 
tribution of  the  banks  in  the  state  in  May,  1847.  At  that  time 
there  were  39  banks  in  Ohio  with  a  capital  of  $5,071,728.  These 
were  located  in  23  of  the  most  populous  Comities,  the  larger 
cities  having  the  most  banks,  thus  Cincinnati  had  6,)  Cleveland 
and  Columbus  each  had  4,  Dayton,  Chillicothe,  Sandusky,  and 
Toledo  2  each,  and  no  other  city  more  than  one.  On  the  basis 
of  the  state's  population  in  1850  the  per  capita  banking  was 


19  Report  of  Ohio  Commissioner  of  Statistics,  1859,  p.  846. 
Appendix,  p.  291. 

21  Dewey,  p.  260. 

22  Message  of  Governor  Dennison,  Jan.  6,  1862. 
Cincinnati  Daily  Gazette,  Jan.  7,  1862. 
Knox,  p.  680. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    203 

$2.56  which  was  fairly  well  distributed  over  the  state,  as  may 
be  seen  from  the  following  table. 


DISTRIBUTION  OF  BANKS  AND  CAPITAL  IN  OHIO,   MAY,    1847. 


s. 

R 

,§ 
d 

It 

Capital   J 

Stock. 

Town.23 

County. 

.s 
1 

13 

1 

£ 

Number  of  I 

s. 

c 

t3 

£ 

1 

"B, 

6 
LI 

<u 
OH 

Springfield            

Clark    

22,178 

1 

$55,710 

$2.512 

33  621 

1 

60  000 

1  785 

Cleveland     

Cuyahoga    

48,099 

4 

349,068 

7.257 

21  817 

1 

74  195  1 

3  401 

Sandusky    

Erie    

18,568 

2 

130  000 

7.001 

Fairfield 

30  264 

1 

49  090 

1  619 

Columbus     

Franklin     

42,909 

4. 

682,710 

15.911 

21  946 

1 

146  550 

6  678 

Cincinnati     

Nnrwalk 

Hamilton    

156,844 

i  mv  9fiQ 

6 

r~~ 

J..,640vQ26-, 

10.456 
7  fi'te 

Steubenville       

Jefferson        .   .  . 

29  133 

1 

71,230 

2  445 

Painesville     

Lake    

14,654 

1 

30,000 

2.047 

Toledo       

Lucas          

12  363 

2 

200,000 

16.177 

Miami    

24,999 

1 

31,840 

1.274 

Dayton 

38,218 

2 

169,750 

4.442 

Pickaway     

21,006 

1 

200,000 

9.521 

Chillicothe 

Ross       

32  074 

2 

199  679 

6.226 

Portsmouth    

Scioto     

18,428 

1 

37,500 

2,035 

Massillon    

Stark        

39  878 

1 

200  000 

5  015 

)  Summit  

27,485 

If 

100,000 

?    7.276 

Cuyahoga   Falls 

| 

100,000 

Warren    

Trumbull       

30,490 

/ 

35,000 

1.148 

Marietta    .   . 

29  540 

1 

60  000 

2  031 

Wooster    

Wayne  

32,981 

1 

249,450 

7.563 

Total    for    23    counties. 

783,698 

39 

$5,071,728 

$6.473 

Total     for     State     (87 
counties)        

1,980,329 

39 

5,071,728 

2.561 

23  From  the  Ohio  State  Auditor's  Report  of  May  5,  1847,  quoted  in  the  Banker's 
Magazine,  Vol.  2  (1847),  p.  128. 

For  location  of  towns,  see  map  of  Ohio,  p.  16. 

24  Population  of  counties  from  Bulletin  No.  41,  12th  Census  of  U.  S.  p.  2. 

25  Computed  by  dividing  amount  of  capital  by  population  of  county  in  1850. 

"» 

Statistics  of  Growth  of  Banks  under  the  General  Law.  — 
The  39  banks  in  Ohio  in  May  1847  comprised  8  old  banks,  9  in- 
dependent banks,  and  22  branches  of  the  state  bank.  The  prin- 
cipal resources  and  liabilities  in  each  class  are  shown  in  the  fol- 
lowing : 


204  Ohio  Arch,  and  Hist.  Society  Publications. 


OHIO  BANK   STATISTICS,    MAY 

Independent.  Branch.  Old. 

Loans  and  Discounts  ...............     $1,187,713  $4,812,772  $4,936,175 

Specie    .............................          201,035  1,080,467  745,047 

Capital    ............................          440,300  2,070,700  2,560,700 

Circulation     ........................          707,700  3,678,900  2,894,400 

Deposits    ...........................          754,600  1,274,900  1,327,300 

These  figures  represent  the  highest  point  reached  during  this 
period  by  the  old  banks.  From  this  time  on  they  gradually  de- 
creased in  number  and  capital  until  finally  the  last  one  went 
under  with  the  panic  of  1857.  The  independent  banks  and  the 
branches  of  the  state  bank,  however,  gradually  increased  from 
the  time  they  were  first  organized  in  1845  until  they  reached 
their  highest  point  in  1851.  In  that  year  there  were  twelve  in- 
dependent banks  with  a  capital  of  $865,000,  circulation  of  $i,- 
391,000,  deposits  of  $1,547,000,  and  loans  and  discounts  of  $2,- 
711,000;  while  there  were  forty-one  branches  of  the  state  bank 
with  a  capital  of  $4,852,000,  circulation  of  $8,785,000,  deposits 
of  $3,134,000,  and  loans  and  discounts  of  $11,994,000.  The 
organization  of  free  banks  also  during  that  year  brought  the  total 
number  of  authorized  banks  in  the  state  up  to  seventy,  the 
highest  number  before  the  war. 


"Bankers'  Magazine,  2:129. 


CHAPTER  X. 

THE   NEW  CONSTITUTION  AND  THE  FREE  BANKING  LAWS  OF 

1851. 

Failure  of  Old  Banks.  —  As  early  as  June  1846  a  New 
York  "Bank  Note  Detector"  published  that  Lake  &  Co.  had  for 
sometime  been  advertising  to  redeem  the  bills  of  the  Bank  of 
Wooster  at  i  to  i-J%  discount.  As  it  was  well  known  in  Ohio 
that  Lake  was  the  chief  owner  of  this  bank,  the  fact  that  he 
was  shaving  his  own  notes  was  taken  as  warning  that  they  were 
questionable.1  Ohio  papers  kept  repeating  the  warning  and  in 
April,  1848,  its  complete  failure  was  announced,  with  the  news 
that  the  loss  to  the  people  of  Ohio  would  be  from  $250,000  to 
$50o,ooo.2 

Early  that  year  there  was  a  run  on  the  Norwalk  and  San- 
dusky  Banks,  and  Ohio  banks  soon  refused  to  take  their  paper, 
which  was  considered  practically  worthless.3  A  special  report 
of  the  state  auditor  on  these  banks  states  that  242  shares  out  of 
looo  of  the  Sandusky  Bank  were'  held  outside  the  state,  and  143 
were  held  by  the  bank  which  had  received  them  for  debts  due 
from  stockholders;  of  $188,801  of -bills  receivable  $141,709  were 
due  from  stockholders;  of  $188,801  of  bills  receiveable  0141,70^ 
were  due  from  stockholders  as  principals  and  they  were  generally 
mutually  indorsers  for  each  other.4 

As  to  the  Bank  of  Norwalk,  of  its  $138,048  bills  receivable 
and  $51,025  bills  of  exchange,  $112,598  was  due  from  stock- 
holders, with  no  personal  security  in  any  case  other  than  the  in- 
doresment  of  a  stockholder,  and  most  of  it  with  no  indorser,  and 
on  the  responsibility  of  a  single  maker  of  the  note.  With  but  one 
exception  every  stockholder  was  indebted  to  the  bank.  These 


'Ohio  Press,  June  6,   1846. 

'Cleveland  Times,   Apr.  5,   1848. 

Cleveland  Plain  Dealer,  May  17,  1848. 

"Cleveland  Times,  May  17,   1848  and  Sept.  6,   1848. 

4  Ohio  Exec.  Doc.,   1848,    Part  II,   p.  13. 

(205; 


206  Ohio  ^Lrch.  and  Hist.  Society  Publications. 

loans  had  long  been  standing  and  had  been  frequently  extended. 
They  were  in  fact  loans  upon  the  security  of  stock.  Besides  this 
there  were  $35,344  of  bills  receivable  due  from  several  indi- 
viduals with  no  security  but  the  maker's  name.  The  liabilities 
to  the  public  were  $189,337,  while  the  ready  cash  means  amounted 
to  $44,341. 5  In  1850  the  notes  of  these  banks  were  quoted  in 
Cleveland  at  from  50  to  75%  discount,  while  the  notes  of  all  the 
other  authorized  Ohio  banks  were  quoted  at  par.6 

The  Anti-  Bank  Party  again  in  Power.  —  Such  things  as 
these  increased  the  opposition  to  banks,  which  indeed  had  never 
died  out  in  the  state.  Bank  reforms,  which  had  been  the  slogan 
of  the  Democrats  from  1838  till  1846,  began  in  the  latter  year 
to  be  superseded  by  the  cry  of  bank  destruction.7  As  one  paper 
puts  it,  the  Democrats  would  "reform  banking  by  the  entire 
abolition  of  all  chartered  and  special  privileges  and  by  a  return 
to  the  constitutional  currency  of  gold  and  silver."8  The  Whigs 
took  the  ground  that  the  new  banking  system  had  -restored  con- 
fidence, that  business  was  in  a  healthful  state  and  that  existing 
conditions  should  not  be  disturbed.9 

The    Constitutional     Convention.  —  The    Democrats    in 
1850,  however,  again  placed  themselves  on  the  hard  money  plat- 
form and  this  time  succeeded  in  winning  at  the  polls.10     They 
also  obtained  a  majority  of  the  delegates  to  the  constitutional 
convention  which  met  that  year  in  Columbus  to  devise  a  new 
constitution  for  the  state;  and  a  determined  effort  was  made  to 
put  a  clause  in  the  constitution  requiring  the  legislature  to  abol- 
j  ish  existing  banks,  prohibiting  the  creation  of  all  banks  of  issue 
I  in  the  future,  and  making  gold  and  silver  the  only  constitutional 
I  currency  in  the  state.11     Early  in  the  struggle,  however,  it  be- 


5  Ohio  Exec.  Doc.,  1848,  Part  II,  p.  21. 
•Cleveland  Herald,  May  1,  1850. 

7  Ibid.,  July  23,  1850. 

8  Ohio  Press,  July  23,  1847. 

'Gov.  Ford's  Message,  Jan.  22,  1849.     Niles,  75;92. 
See  also  Cleveland  Herald,  July  20,  1850. 
10  Ohio  Statistics,  1904,  p.  485. 
"Bankers'  Magazine,  5:175. 

The   Belmont    Chronicle,    and    Farmers'    and   Mechanics'    Advocate, 
(St.  Clairsville),  Sept.  27,  1850. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    207 

came  evident  that  there  was  considerable  division  of  sentiment 
among  the  Democrats  in  the  convention  on  the  subject  of  banks, 
and  that  it  would  require  the  strong  lash  of  the  party  to  keep 
all  the  members  in  the  hard  money  traces.  Mr.  Clark  of  Lorain 
introduced  a  resolution  in  May  contemplating  free  banking  under 
certain  regulations,  if  the  people  of  the  state  should  approve. 
Mr.  Dorsey  of  Miami,  also  a  Democrat,  introduced  resolutions 
prohibiting  the  legislature  from  granting  special  bank  charters, 
but  permitting  it  to  pass  general  banking  laws  with  certain  re- 
strictions, which  must,  however,  be  submitted  to  the  people  be- 
fore they  should  go  into  operation.12  There  were  in  the  con- 
vention, as  the  Richland  County  Democrat  put  it,  48  "sound 
progressive"  Democrats,  16  "moderate  or  conservative"  Demo-" 
crats,  and  44  Whigs,  thus  giving  the  last  two  elements  a  ma- 
jority. The  Whigs  labored  incessantly  to  prevent  the  insertion 
of  the  hard  money  clause,  and  finally  succeeded,  the,-clause 
ing _w.ittiir»  anp  vot**  ^  hping--.placed  in  the  .new  constitution. 13_ 

When  the  new  constitution  was  finally  adopted  in  June 
1851,  it  contained  clauses  forbidding  the  legislature  from  pass- 
ing special  acts  conferring  corporate  powers;14  providing  for 
double  liability  of  stockholders  in  all  corporations;15  and  requir- 
ing that  no  act  of  the  legislature  authorizing  banks  should  take 
effect  until  submitted  to  the  people  at  the  general  election  next^ 
succeeding  its  passage,  and  be  approved  by  a  majority  of  those 
voting  at  such  election.16 

Bank  Reform  in  the  Legislature.  —  Meanwhile  the  state 
legislature  elected  in  1850  had  also  been  working  on  the  banking 
question.  While  the  state  convention  on  July  4  had  adopted  a 
hard  money  plank,  this  was  not  approved  by  all  in  the  party.  For 


12  Cleveland  Herald,  May  29,  1850. 
^'Ibid.,  Sept.  10,  1850  and  Oct.  2,  1851. 

"Art.  13,  Sec.  1. 

From  1802  to  1850  the  legislature  had  granted  3,343  special  acts  of 
incorporation,  not  including  municipal  corporations,  51  of  these  had  been 
special  acts  incorporating  banks,  all  previous  to  1845.  In  addition  there 
had  been  37  acts  amending  bank  charters.  —  Ohio  Exec.  Doc.,  1850,  Part 
II,  p.  637. 

15  Art  13,  Sec.  3. 

16  Ibid.,  Sec.  7. 


208  Ohio  Arch,  and  Hist.  Society  Publications. 

example  the  Muskingum  County  convention  a  month  later  de- 
clared that  they  "regarded  the  resolutions  of  the  state  conven- 
tion simply  as  the  expression  of  the  opinions  of  the  persons  there 
assembled."17  There  was  a  strong  bank  reform  element  in  the 
party,  and,  moreover,  many  of  the  radicals  were  not  opposed  to 
banks  so  much  as  to  the  special  privileges  and  monopoly  power 
which  had  been  so  characteristic  of  the  old  banks.18 

Besides  there  was  a  widely  circulated  notion  that  more 
banks  were  needed  in  various  sections  of  the  state.  Thus  the 
Bankers'  Magazine  in  1849  pointed  out  that  Ohio  the  third  state 
in  the  Union  in  population  had  not  two-thirds  the  banking  capital 
of  Rhode  Ibiand  with  a  population  of  about  I35,ooo.19  The 
Cincinnati  Gazette  in  1850  was  complaining  that  notwithstand- 
ing" tHe~ woliTIef "ful~stndes  of  "Cincmnati'>s  ~comm*eTciaT^manu f ac- 
.  turing,  and  shipping  interests,  legitimate  banks  were  from  year 
to  year  denied  the  city,  which  In  banking  capital  was  far  behind 
other  cities  of  her  size  and  smaller.20  And  Cleveland's  manufac- 
turing, commercial,  and  marine  interests  in  1851  were  calling  for 
"banks  which  will  devote  themselves  exclusively  to  discounting 
manufacturing  and  mercantile  paper,  paper  made  payable  at 
home  instead  of  at  the  east."21 

In  response  to  such  conditions  the  legislature  of  1851,  though 
the  Democrats  had  two-thirds  of  both  branches,  enacted  another 
general  banking  law.22  This  was  the  Free  Banking  Law  of 
March  21,  1851,  and  although  many  of  the  Democratic  .papers 
of  the  state  opposed  and  bitterly  denounced  the  act,23  it  was 
really  in  harmony  with  the  Democratic  ideas  of  equal  rights. 
Its  popularity  is  attested  by  the  fact  that  about  the  same  time 
free  banking  laws  were  passed  in  Indiana,  Illinois,  Wisconsin, 
and  a  dozen  other  states.24 


/"Cleveland  Herald,  Sept.  11,  1850. 
/   M  See  p.  206. 

^Bankers'  Magazine,  4:16. 
ribid.,  5  :169  and  882. 
{^Cleveland  Herald,  May  3,  1851. 
t/\"Ibid.,  May  29, i  1851. 
.  '""Ibid.,  Nov.  18,  1851. 

24  White  —  Money  and  Banking,  p.  354. 

Report  of  Comptroller  of  Currency,  1896,  Vol.  1,  p.  44. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War,    209 

The  Free  Banking  Law  of  Mar.  21,  1851. 25  —  This  law 
provided  that  any  number _ofjiatural  persons) not  less  than  three 
might  organize  a  company  and  engage  in  franking,  with  a  capital 
stock  of  not  less  than  $25,000  nor  more  than  $500,000.  Before 
such  company  could  begin  business  60%  of  its  capital  stock  must 
be  paid  in,  and  securities  of  the  State  of  Ohio  or  of  the  United 
States  at  least  equal  in  amount  to  60%.  of  its  capital  stock  must 
be  deposited  with  the  state  auditor.  The  auditor  was  then  to 
have  circulating  notes  engraved  and  furnish  them  to  the  bank 
equal  in  amount  to  the  securities  deposited,  but  not  more  than 
three  times  the  bank's  capital. 

Notes  of  the  same  denomination  and  in  the  same  propor- 
tions as  those  permitted  the  State  Bank  might  be  issued;  but 
30%  of  the  amount  of  the  circulation  must  be  kept  on  hand  in 
coin  or  its  equivalent,  actual  deposits  in  sound  banks  of  New 
York,  Philadelphia,  or  Baltimore  being  deemed  equivalent  to 
coin.  All  banks  organized  under  this  act  must  receive  the  notes 
of  each  other  at  par.  No  bank  should  exchange  its  notes  for 
stock,  nor  its  stock  for  securities  to  be  deposited  with  the  auditor 
for  the  redemption  of  notes.  Uncurrent  notes  must  not  be  paid 
out,  and  mutilated  notes  must  be  exchanged  and  burnt. 

The  liabilities  of  each  bank  were  limited,  loans  to  stock- 
holders limited,  dividends  forbidden  when  capital  stock  should 
be  diminished  and  permitted  in  no  case  exceed  from  net  profits, 
and  not  more  than  6%  interest  in  advance  should  be  charged  on 
loans.  If  a  bank  should  fail  to  redeem  its  notes,  the  auditor  was 
to  sell  its  deposited  securities  and  redeem  the  notes  from  the 
proceeds.  Besides  there  was  individual  liability  of  stockholders 
in  proporition  to  their  stock  when  a  bank  should  fail  to  redeem; 
and  damages  for  refusal  to  redeem  notes  were  fixed  at  15%  per 
annum  from  time  of  refusal  till  resumption.  Where  a  bank  was 
owned  by  less  than  6  stockholders  they  were  individually  liable 
for  all  the  debts  and  liabilities  of  the  bank. 

The  law  also  made  it  the  duty  of  the  auditor,  treasurer,  and 
secretary  of  state,  or  a  majority  of  them,  as  often  as  once  each 


25  Laws  of  Ohio,  Vol.  49,  pp.  41-56. 
14 


210  Ohio  Arch,  and  Hist.  Society  Publications. 

year  to  appoint  some  suitable  person  in  the  vicinity  of  the  bank, 
but  not  a  stockholder  in  any  bank  in  the  state,  to  examine  the 
bank  and  make  a  detailed  report  to  the  state  auditor.  All  the 
free  banks  were  to  have  corporate  power  until  1872,  and  there- 
after till  the  act  should  be  repealed.26 

Free  Banks  organized  in  1851  and  1852.  —  During  the  next 
few  months  following  the  passage  of  the  free  banking  law 
twelve  new  banks  were  organized  under  its  provisions,  thus  in- 
creasing the  number  of  banks  in  the  state  to  seventy,  with  a 
capitalization  on  November  15,  1851,  of  $7,949,356.  In  1852 
another  new  bank  was  organized  under  this  law  making  thirteen 
free  banks  in  all.  Others  were  contemplated  but  the  going  into 
effect  of  the  new  constitution  effectually  stopped  the  organiza- 
tion of  any  further  banking  associations  by  the  provision  re- 
quiring submission  to  the  people  at  a  general  election.27 


K  For  certain  other  provisions  of  the  law  see  Appendix,  p.  271 

27  See  page  207. 

For  statistics  of  free  banks  see  Appendix,  pp.  330-336. 

The  Attorney  General  of  Ohio  in  1852  gave  it  as  his  opinion  that 
no  new  banks  could  be  established  under  the  free  banking  act  on  account 
of  the  new  constitution.  —  Ohio  Exec.  Doc.,  1854,  No.  9,  p.  564. 


CHAPTER  XI. 
BANKING  AND  CURRENCY  CONDITIONS  IN  OHIO,  1851  TO  1854. 

End    of    Another    Period    of    Bank    Expansion.  —  The 

adoption  of  the  new  state  constitution  in  June,  1851,  so  soon 
after  the  passage  of  the  free  banking  law,  and  the  opinion  of  the 
attorney  general  given  in  1852  that  according  to  the  constitution 
no  more  new  banks  could  be  established  under  that  law,  marked 
the  end  of  another  period  of  expansion  in  authorized  banking 
in  Ohio.  From  the  adoption  of  the  general  banking  law  in  1845 
up  to  this  time  the  number  of  authorized  banks  had  steadily  in- 
creased, as  also  had  the  specie  in  their  vaults,  their  deposits,  their 
capital,  their  circulation,  and  their  loans  and  discounts.  The 
only  exception  to  this  constant  increase  was  that  with  the  busi- 
ness depression  of  1847  their  deposits  showed  a  temporary  fall- 
ing off,  and  their  capital  and  loans  showed  a  lower  rate  of  in- 
crease. In  1851  the  circulation  reached  $11,832,511,  and  in  1852 
the  loans  reached  $19,241,225,  the  highest  point  either  had  ever 
attained,  and  the  highest  they  were  destined  to  reach  before 
the  Civil  War.1 

Expansion  Period  one  of  Business  Prosperity.  —  This 
period  of  bank  expansion  was  also  one  of  increased  business 
prosperity  in  the  state.  While  the  banking  capital  of  $3,000,000 
in  1843  was  rising  to  $19,000,000  in  1852,  the  population  rose 
to  2,000,0000,  and  the  total  assessed  value  of  taxable  property 
which  was  $138,000,000  in  1842,  rose  to  $508,000,000  in  i852.2 
Within  this  period  the  State  had  completed  her  600  miles  of 
canals  and  railroads  also  had  come  to  be  an  important  factor 
in  the  transportation  of  her  products. 

In  April,  1853,  the  "Railroad  Record"  showed  that  Ohio  had 
the  largest  mileage  of  railroads  constructing  and  also  the  largest 
amount  of  surplus  produce.  With  the  exception  of  cotton  and 


1  See  diagram  in  the  Appendix,  p.  283. 
3  See  Appendix,  p.  292. 

(211) 


212  Ohio  Arch,  and  Hist.  Society  Publications. 

tobacco  Ohio  was  then  exporting  more  agrciultural  products  and 
manufactures  from  agricultural  products  than  were  exported 
from  the  whole  United  States.3  During  the  year  1852  there 
were  driven  from  Ross  County  7,000  head  of  beef  cattle,  as 
many  more  from  Pickaway  County,  and  from  the  entire  state 
68,000.  That  year  also  Ohio  exported  over  2  million  barrels  of 
flour,  3  million  pounds  of  butter,  4  million  pounds  of  cheese,  6 
million  pounds  of  wool,  6  million  bushels  of  corn,  and  near  10 
million  bushels  of  wheat,  besides  tobacco,  whiskey,  pork,  and 
beans,  the  total,  even  at  the  low  prices  prevailing  in  Ohio  in 
1852,  amounting  to  more  than  $40,000,000.*  This  was  double 
the  value  of  the  exports  ten  years  before,5  and  since  it  was  sur- 
plus one  might  say  that  it  represented  a  net  profit  fdr  the  year 
of  something  like  8%  on  the  500  millions  of  landed  property  in 
the  state. 

The  Profits  of  the  Banks.  —  As  this  export  trade  created 
a  good  part  of  the  demand  for  the  banking  facilities  in  Ohio  it 
may  be  well  at  this  point  to  inquire  what  part  of  this  large  profit 
accrued  to  the  banks.  ^JFpj^urpn&e^jjfJaxation  the  banks_were 
required  to  report  their  yearly  dividends  to  the  state  auditor, 
and  his  reports  show  that  in  1850  the  net  profits  of  the  12  in- 
dependent banks  amounted  to  $117,372,  the  41  branches  of  the 
state  bank  $690,781,  and  4  old  banks  $194,223,  a  total  of  $i,- 
002,376  or  an  average  of  nearly  14%  on  their  total  capital.  In 
the  case  of  individual  banks  the  rates  of  profit  on  the  capital 
paid  in  ranged  from  3.5  to  18.1%  for  the  independent  banks 
reporting,  5.4  to  35.2%,  for  the  branch  banks,  and  4  to  8.3% 
for  the  old  banks.  In  1851  the  net  profits  ranged  somewhat 
higher,  being  $122,050  for  the  independent  banks,  $733,844  tor 
the  branches  of  the  state  bank  and  $194,323  for  the  old  banks, 
a  total  of  $1,050,117.  The  rates  for  the  individual  banks  ranged 
from  3.1  to  37-i%,  the  latter  being  the  profit  of  the  Harrison 
County  Branch  at  Cadiz.6  For  the  year  1853,  36  branches  01 
the  state  bank  reported  dividends  of  $572,157,  the  rate  varying 


3  See  Statistical  Abstract  of  the  United  States,  1911,  p.  718. 

4  Daily  Commercial  Register   (Sandusky,  O.),  Apr.  11,  1853. 
r*,See  p.  187. 

(  eKuditor's  Report,  Mar.JLG,  1852. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    213 

from  6  to  20%  ;  6  independent  banks  reported  $95,840,  the  rate 
ranging  from  7.6  to  13.9%  ;  and  n  free  banks  reported  $72,996, 
the  rates  running  from  2.6  to  I2.2%7  These  amounts  do  not 
include  the  undivided  profits  in  either  case.8 

Sources  of  Banking  Profits.  —  Since  both  the  state  bank- 
ing law  of  1845  and  the  free  banking  law  of  1851,  under  which 
nine-tenths  of  these  banks  were  organized,  prohibited  the  banks 
from  charging  over  6%  interest  in  advance,  one  might  wonder 
whence  these  large  dividends.  In  general  the  banks  made  their 
profits  from  three  sources: 

1.  The  interest  on  the  stocks  deposited. 

2.  The  interest  derived  from  bill  and  note  discounting. 

3.  The  premiums  and  profits  from  eastern  exchange. 

As  to  the  first  point,  the  stocks  deposited  mostly  bore  5  and 
6%.  interest,  and  in  the  case  of  the  state  stock  banks  were  at 
least  equal  in  amount  to  their  circulation.  Sometimes  the  stocks 
deposited  by  a  bank  were  not  its  actual  property  but  were  bor- 
rowed, the  bank  paying  i  or  2%.  to  the  owner  for  its  use.9  The 
profits  arising  from  the  second  source  need  no  explanation. 
They  probably  did  not  constitute  over  3/5  of  the  bank  profit. 

A  big  source  of  profit,  however,  was  the  premium  realized 
from  eastern  exchange  over  and  above  the  legal  interest.  Ohio 
bought  most  of  her  imports  in  New  York  and  there  the  settle- 
ment of  balances  was  ultimately  made  for  both  imports  and 
exports.  Comparatively  little  specie  was  used  in  these  settle- 
ments. Ohio's  surplus  produce  always  more  than  paid  for  the 
imports.  Eastern  exchange  arose  from  drafts  and  bills  drawn 
by  Ohio  traders  upon  produce  either  shipped  or  to  be  shipped 
east.  These  drafts  or  bills  were  discounted  at  the  Ohio  banks, 
which  then  charged  simple  interest  for  the  time  they  had  to  run. 
They  cost  little  or  nothing  to  transmit  and  collect  east.  At 


7  Ibid.,  Apr.  8,  1854. 

8  For  dividends  of  individual  banks  in  1853  and  net  profits  of  each 
from  date  of  organization  to  end  of  1853,  see  Appendix,  p.  293. 

The  Commercial  Branch,  Cleveland,  paid  its  stockholders  an  aver- 
age of  nearly  20%  for  20  years  till  its  charter  terminated  in  1865. — 
Mag.  of  West.  Hist.,  2  :276. 

*  Special  Report  of  Auditor.  —  Exec.  Doc.,  1853,  Part  II,  p.  326. 


214  Ohio  Arch,  and  Hist.  Society  Publications. 

maturity  the  banks  drew  against  them,  and  being  more  con- 
venvient  and  less  liable  to  risk  than  specie,  usually  commanded  a 
small  premium. 

The  majority  of  the  bills  were  60  day  drafts.  Regular  6% 
interest  in  advance  on  these  was  practically  equal  to  7%.  In 
addition  there  was  the  current  rate  of  exchange  at  maturity, 
frequently  one  per  cent  or  more.  On  such  bills  they  made  13% 
per  annum.  If  there  were  a  premium  of  one-half  percent  this 
profit  became  16%,  which  much  of  the  time  was  the  ruling  rate. 
On  a  30  day  bill,  or  one  having  still  less  time  to  run,  the  interest 
made  would  be  still  higher,  25  and  sometimes  3O%.10 

Other  profits  arose  from  buying  and  selling  transient  eastern 
drafts.  At  Cincinnati  and  Cleveland  much  transient  exchange 
was  purchased  in  the  market,  which  yielded  considerable  profits, 
from  an  eighth  to  a  quarter  percent.  It  frequently  happened 
that  such  a  bill  was  sold  on  the  same  day  it  was  purchased.  If 
one-fourth  percent  was  made  on  the  transaction  and  the  capital 
employed  in  such  business  was  turned  once  a  week,  the  profit 
amounted  to  13%  per  annum,  if  twice  a  week  26%,  if  every  day 
75%.  Doubtless  many  exchange  discounts  and  purchases  were 
kiting  operations  by  mutual  tacit  agreement,  where  no  funds 
were  east,  nor  expected  to  be  there,  and  yet  be  paid  by  the 
bank  and  exchange  added.11 

The  Ten  Per  Cent  Interest  Law.  —  One  noticeable  fact 
about  banking  operations  in  the  early  5o's  was  the  gradual  ex- 


10  Example  from  Savings  Bank  of  Cincinnati :    Dec.  14,  1853,  bought 
60  day  draft  on  Philadelphia: 

Face  of  draft..  $3500 


Charged   exchange..     17  50 
Interest    ,  36  75 


$54  25 
Exchange    premium     35  00 


Profit  $89  25  =  over  1  \%  a  month  or  over  15%  a 

year. 

See  report  special  bank  examiner,  Reemelin,  Oct.  15,  1854,  p.  347. 
"Report  of  Special  Bank  Examiner,  Reemelin,  Oct.  15,  1854,  p.  560. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    215 

tinction  of  all  home  discounting.  In  the  statement  of  twenty- 
four  stock  banks  reported  in  1854  by  the  special  bank  examiner 
appointed  by  the  auditor  and  secretary  of  state,  it  appears  that 
ten  million  of  the  banks'  discounts  were  for  bills  and  only  four 
million  for  notes.  Before  1850  the  tendency  was  rather  to  dis- 
count notes  for  goods  purchased  and  sold  on  credit.12  The 
change  was  due  largely  to  what  was  called  the  10%  interest  law, 
which  was  passed  in  1850  largely  through  the  efforts  of  Senator 
Payne  of  Cuyahoga  County.13 

This  law  allowed  10%  interest  to  be  charged  in  special  con- 
tracts, and  was  supposed  at  the  time  of  its  passage  to  be  an  in- 
ducement to  outside  capital.  Its  practical  result,  however,  was  to 
create  two  classes  of  capitalists :  the  brokers  and  private  bankers, 
who  could  charge  10% ;  and  the  authorized  banks,  limited  by  the 
general  banking  laws  to  6%.14  This  seriously  affected  banking 
operations.  Bankers  who  previously  had  been  content  with  divi- 
dends of  7  or  8%,  began  to  complain  of  any  less  rate  than  10%. 
Cashiers,  hearing  this  and  fearing  a  stampede  of  their  stock- 
holders into  private  banking,  strained  every  nerve  to  come  up  to 
the  coveted  10%.  Profits  were  divided  closer  than  safe  banking 
would  justify;  contingent  funds  were  omitted;  and  losses  car- 
ried forward,  instead  of  being  charged  off.  The  exchanges  be- 
ing more  profitable  than  note  discounting,  many  banks  ceased 
in  large  part  to  discount  home  paper.15 

Bankers  interested  in  Broker  Establishments.  —  Many 
bank  managers  became  interested  in  broker  establishments,  and 
many  brokers  in  banks,  both  in  and  outside  the  state.  Both 
bankers  and  brokers  were  quick  to  discover  opportunities  for 
mutual  profit.  It  followed  that  the  banks  seldom  had  any  money 
to  loan  at  6%,  when  they  could  hand  it  over  to  the  broker  who 


"Hunt's  Merchants'  Magazine,  21:96,   (1849). 

13  Cleveland  Herald,  Sept.  30,  1850. 

"Daily  Ohio  Statesman,  Jan.  8,  1858. 

It  was  said  that  the  author  of  this  law,  doubting  his  re-election  to 
the  legislature,  intended  to  retire  to  private  life  and  devote  his  business 
hours  to  the  pleasant  occupation  of  shaving  notes,  and  to  make  it  pay, 
procured  the  passage  of  the  law  allowing  10%  interest.  —  Cleveland  Her- 
ald, Sept.  26,  1850. 

15  Ohio  Exec.  Doc.,  1854,  No.  9,  p.  561. 


216  Ohio  Arch,  and  Hist.  Society  Publications. 

was  allowed  to  charge  io%.1G  The  borrower  presenting  himself 
at  the  bank  would  be  politely  told  that  they  had  no  money  to 
lend  at  that  time;  but  as  he  was  about  to  leave  he  would  be 
told  that  he  might  possibly  get  it  next  door  or  around  the  corner. 
There  he  would  be  accommodated,  but  at  a  rate  two  or  three  per 
cent  above  the  proper  discount.  To  prevent  this  sort  of  thing 
in  the  State  Bank  it  was  provided  that  no  branch  should,  directly 
or  indirectly,  establish  an  agency  anywhere  for  carrying  on  a 
banking  business.  And  it  is  said  that  no  such  irregular  con- 
nections were  to  be  found  among  the  branches  of  the  State 
Bank.17  The  same  cannot  be  said  of  all  the  other  banks  how- 
ever. In  one  locality  in  1854,  a  few  men  organized  as  a  bank 
on  one  side  of  the  street  were  confined  to>  6%,  but  the  same 
men  as  a  broker  partnership  on  the  other  side  of  the  street  were 
allowed  to  charge  ten, — and  both  dealing  with  the  same  money. 
In  Cincinnati  managers  of  a  foreign  bank  were  loaning  the  notes 
of  that  bank  at  10%,  while  the  Ohio  banks  who  circulated  the 
same  notes  by  arrangement,  and  were  furnishing  eastern  ex- 
change for  them,  could  not  legally  charge  more  than  6%.  Again 
a  bank  on  the  lake,  not  being  permtited  to  charge  over  6%  at 
its  counter,  was  sending  its  capital  to  a  broker  firm  in  Cin- 
cinnati, who  were  its  stockholders,  and  they  were  charging  10% 
for  the  same  money.18 

Increase  of  Private  Banks  and  Broker  Shops.  —  The 
withdrawal  of  so  many  of  the  authorized  banks  from  home  dis- 
counting, along  with  the  tempting  10%,  fostered  into  existence 
all  over  the  state  private  bankers  and  brokers  of  but  little  real 
capital.  They  offered  6%  interest  and  more  for  deposits  and 


18  Daily  National  Democrat  (Cleveland),  Sept.  30,  1859. 

The  Miami  Valley  Bank  at  Dayton  and  the  Seneca  County  Bank  at 
Tiffin  are  examples  of  banks  whose  chartered  privileges  were  placed  in 
abeyance  in  the  hands  of  their  principal  stockholders  —  brokers,  who  used 
the  circulation  and  enjoyed  all  the  advantageous  part  of  the  charter,  but 
escaped  all  the  legal  restraints,  especially  as  to  interest.  —  Ohio  Ex.  Doc., 
1854,  No.  9,  p.  559. 

Daily  Ohio  Statesman,  Jan.  8,  1858. 

"  State  Bank  of  Ohio  —  Janney,  p.  154. 

18  Ohio  Exec.  Doc.,  1854,  No.  9,  p.  561. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    217 

banked  on  them.19  They  also  entered  the  exchange  market  and 
operated  without  restraint  as  to  discount  or  premium.  What 
rate  of  interest  they  charged  was  not  positively  known  but  it 
was  generally  assumed  to  be  not  less  than  12%  and  from  that 
up  to  50%  per  annum.20 

Little  is  known  as  to  the  number  of  these  private  banks  and 
broker  establishments  in  the  state.  The  Bankers'  Magazine  in 
1851,  commenting  on  the  insufficiency  of  incorporated  banking 
capital  in  Cincinnati,  names  eighteen  private  banks  but  also 
refers  to  a  "host  of  brokers  who  are  employed  in  shaving  notes 
or  getting  them  shaved;"  and  referring  to  their  high  interest 
charges  states  that  "the  mercantile  community  of  Cincinnati  are 
annually  fleeced  out  of  from  20  to  25%  of  their  hard  earned 
profits  in  the  shape  of  usurious  interest,"  while  the  private 

bankers  and  brokers  have  built  up  fortunes  for  themselves.21 

*  ^^ 

Many  of  these  firms  were  quite  important.     The  ChTcm- 

nati  Gazette  in  December  1852,  refers  to  several  private  banks 
in  that  city  returned  by  the  assessor  at  from  $200,000  to  $400,- 
ooo  each  and  numerous  others  at  150,000  dollars  each.22  While 
in  October  1853  the  Bankers'  Magazine  estimates  the  private 
banking  capital  of  Cincinnati  at  $4,000,000,  not  including  brokers 
with  taxable  capital  under  $10,000.  The  capital  of  the  firms  in- 
cluded ranged  from  $17,700  to  $i,2OO,ooo.23  The  largest  of 
these,  Ellis  and  Sturges,  together  with  two  other  well  known  and 
well  thought  of  houses,  Smead  and  Co.,  and  Goodman  &  Co., 
suspended  payment  in  the  fall  of  1854,  causing  great  excitement 
in itEe  city.24  TTfe~  bankers'  Magazine  in  1854  names  53  private 


19  Cleveland  Herald,  May  9,  1851,  contains  an  ad.  of  one  of  these  pri- 
vate bankers,  offering  6%  interest  on  demand  deposits,  8%  if  subject  to  10 
days'  notice,  and   10%  on   special  deposits   for  12  months.     Another  in 
the  same  paper  offered  from  4  to  6%  interest.     Also  in   Cist's  Weekly 
Advertiser  (Cincinnati),  February  11,  1853,  a  broker  was  advertising  for 
note  and  bill  discounting,  and  offering  6%  interest  on  checking  deposits 
and  higher  interest  if  left  for  a  specified  time. 

20  Bankers'  Magazine,  5:882   (1850-1). 

nd  882. 


22  Cleveland  Herald,  Dec.  20,  1852. 

23  Bankers'  Magazine,  8:359. 

24  Cincinnati  Daily  Enquirer,  Nov.  9,  1854. 


218  Ohio  Arch,  and  Hist.  Society  Publications. 

banks  in  Ohio  ;25  while  special  bank  examiner  Reemelin  the  same 
year  estimated  that  there  were  not  less  than  100  broker  shops 
and  private  banking  houses  in  the  state.26 

Failure  of  Laws  against  Unauthorized  Banking.  —  These 
private  bankers  and  brokers  aided  greatly  to  demoralize  regular 
banking  operations  and  force  upon  the  people  of  the  state  a  de- 
preciated currency.  Their  unrestrained  exchange  operations 
helped  to  prevent  any  reliable  currency  standard,  and  eastern  ex- 
change was  rendered  more  fluctuating.  Their  desire  for  cheap 
money  and  plenty  of  it  to  loan  at  high  and  profitable  rates  of 
interest  led  them  to  the  use  of  more  and  more  foreign  and  ques- 
tionable home  paper,  thus  helping  to  give  Ohio  a  depreciated  cur- 
rency. 

All  laws  against  unauthorized  banks  and  bank  paper  seem 
to  have  been  in  vain.  Almost  at  once  after  the  passage  of  the 
general  banking  law  of  February  24,  1845,  tne  legislature  had 
passed  a  law,  March  12,  1845,  prohibiting  anyone  from  engag- 
ing in  banking  without  express  authority  of  the  state  law.27 
That  this  law  proved  inadequate  is  seen  from  the  fact  that  less 
than  a  year  later,  January  22,  1846,  an  act  was  passed  to  prevent 
unauthorized  banking,  which  prohibited  banks  and  brokers  from 
banking  on  the  currency  of  other  states,  and  prohibited  the  cir- 
culation of  foreign  notes  under  $5  and  all  notes  of  old  banks 
whose  charters  had  expired.28 

The  State  Bank  of  Ohio  endeavored  to  act  in  accordance 
with  these  laws,  and  discountenanced  the  circulation  of  foreign 
notes  in  the  state.  On  August  n,  1847  the  board  of  control 
passed  a  resolution  that  after  October  I,  of  that  year  no  branch 
should  circulate  any  foreign  bank  notes  not  readily  converted 
into  coin  at  par.  The  board  of  control  repeatedly  took  action 


K  Bankers'  Magazine,  9:19-23. 

26  Ohio  Exec.  Doc.,  1854,  No.  9,  p.  562. 

"This  was  supplemented  by  an  act  of  May  1,  1854,  prohibiting  the 
paper  of  banks  whose  charters  had  expired.  —  Ohio  Laws,  52  :133. 

28  Ohio  Laws,  44:13. 

Knox,  682. 

This  was  amended  March  2,  1846,  allowing  the  state  treasurer  to 
circulate  such  notes  until  August  15,  1846.  —  Ohio  Laws,  44:116. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War     219 

on  the  subject  of  unauthorized  circulation.29  Not  all  other  banks, 
however,  were  so  careful,  and  February  24,  1848  an  act  was 
passed  forbidding  Ohio  banks  to  pay  out  foreign  bank  notes~ 
under  penalty  of  one-half  the  amount  of  the  bills  so  paid  out, 
while  any  notes  purchased  in  violation  of  this  act  should  be 
deemed  null  and  void.30  The  prohibition  could  not  be  enforced, 
however,  and,  as  we  have  seen,  after  the  passage  of  the  10% 
interest  law  in  1850  the  evil  became  worse. 

The  small  notes  gave  the  most  trouble  and  on  May  i,  1854, 
a  law  was  passed  forbidding  the  circulation  after  October  i  of 
any  foreign  notes  less  than  $10,  under  penalty  of  $100  fine  and 
forfeiture  of  charter.31  This  was  intended  to  get  rid  of  what 
one  paper  called  "the  swarm  of  unsafe,  rotten  shinplasters  with 
which  we  are  flooded  from  other  states."32  The  small  note  law 
was  very  generally  disregarded,  however,  especially  whenever 
currency  became  scarce  or  exchange  advanced;33  and  when  the 
Republicans  came  into  power  it  was  repealed  March  5,  i856.34 
In  Governor  Chase's  inaugural  address  in  January  o-f  that  year 
he  remarks:  "All  attempts  to  exclude,  by  penal  legislation,  the 
bank  notes  of  other  states  from  circulation  in  this  have  proved 


29  State  Bank  of  Ohio  — Janney,  p.  171. 

30  Ohio  Laws,  46:79. 

Ten  years  later  Gov.  Chase  recommended  to  the  legislature  the 
strengthening  of  this  law  to  prevent  the  evils  of  foreign  paper  in  the 
state.  — Daily  Ohio  Statesman,  Jan.  4,  1858. 

31  Ohio  Laws,  52  :83. 

32  Cincinnati  Daily  Enquirer,  June  25,  1854. 

33  Many  of  the  small  notes  circulating  in  Ohio  were  those  of  eastern 
banks,  which  if  good  at  all  answered  as  exchange  for  all  ordinary  pur- 
poses, and  when  exchange  was  high  poured  into  the  state  until  a  decline 
in  exchange  rendered  it  expensive  to  continue  the  operation.  —  Daily  Ohio 
Statesman,  Nov.  28,  1855. 

M  Ohio  Laws,  53 :20. 

An  Ohio  paper  has  this  to  say  on  the  subject:  "One  of  the  acts 
of  the  last  Democratic  Legislature  was  to  render  the  passing  of  small 
notes  on  foreign  banks  illegal,  punishing  it  with  an  adequate  penalty. 
While  that  law  was  in  force,  there  was  specie  enough  in  use  to  answer 
every  demand.  But  the  Black  Republicans  repealed  this  law,  and  in  less 
than  30  days,  the  State  was  flooded  with  petty  rags,  many  of  them  on 
banks  the  location  of  which  it  was  impossible  to  trace  out  on  any  map 
yet  published."  —  Daily  Ohio  Statesman,  Oct.  10,  1857. 


220  Ohio  Arch,  and  Hist.  Society  Publications. 

ineffectual;   and  the  public  sentiment   demands   an   increase   of 
banking  capital,  organized  under  our  own  laws."35 

Demand  for  More  Banking  Capital  in  Ohio.  —  The  cry 
for  more  banking  capital  was  an  old  one  in  Ohio.  But  it  was 
especially  loud  in  the  years  following  the  adoption  of  the  new 
constitution.36  The  assertion  was  often  made  that  not  enough 
banking  capital  was  authorized  by  the  laws.  It  may  be  ques- 
tioned, however,  whether  the  statement  was  altogether  correct. 

"Cincinnati  was  the  place  most  often  cited  where  it  was  said 
the  State  had  not  provided  sufficient  banking  capital  and  circula- 


ion.37  Yet  the  banks  authorized  there  and  in  existence  in  1854 
might  have  issued  a  circulation  of  at  least  $4,500,000.  The  ar- 
gument of  a  lack  of  capital  or  opportunity  to  maintain  such  a 
circulation  seems  weakened  somewhat  by  the  fact  that  five  banks 
in  Indiana  and  Kentucky  issuing  circulation  to  the  amount  of 
some  $3,000,000  were  maintained  chiefly  from  Cincinnati  cap- 
ital,33 while  the  Commercial  Bank  of  Cincinnati  protected  for 
some  time  a  large  Tennessee  circulation,  and  all  the  Cincinnati 
banks  and  brokers  aided  in  the  circulation  of  foreign  notes.  The 
same  money  that  maintained  a  foreign  circulation  might  have 
maintained  a  home  currency. 


85  Cincinnati  Daily  Enquirer,  Jan.  15,  1856. 

86  Mr.  H.  F.  Baker  writing  in  1854  on  Banking  in  the  United  States, 
states  that  the  great  want  of  banking  capital  was  the  chief  difficulty  in 
the  Ohio  system.  —  Bankers'  Magazine,  9:6,   (July,  1854). 

37  See  pp.  208  and  217. 
Bankers'  Magazine,   11:171. 

88  Foreign  Bank.  Ohio   Owners.         Circulation. 

Connersville   Bank    B.   F.   Sanford $834,875 

Steuben   County   Bank S.  W.  Torrey  &  Co.  150,000 

New  York   and   Virginia    State   Stock 

Bank    Atwood    Dunlevy   & 

Co 236,000 

Kentucky  Trust  Co B.   F.   Sanford 1,000,000 

Branch  of  State  Bank,  Lawrenceburg.  .S.  W.  Torrey  &  Co.  not  known 


$2,220,875 

B.  F.  Sanford  was  chief  stockholder  and  also  chief  debtor  of  the 
Savings  Bank  of  Cincinnati,  a  free  bank.  — Ohio  Exec.  Doc.,  1854,  No. 
9,  p.  565. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    221 


The  same  may  be  said  of  other  places  in  Ohio  whose  bankers 
started  Indiana  banks.39  Various  Illinois  and  even  more  distant 
banks  also  were  used  for  circulation,  for  which  Ohio  capital 
and  exchange  furnished  the  basis,  thus  indicating  that  it  was 
not  lack  of  capital  in  Ohio  that  prevented  a  sufficient  home  cur- 
rency. That  it  was  not  prevented  by  want  of  authority  is  also 
suggested  by  the  fact  that  at  no  time  during  this  period  had 
all  the  $6,150,000  capital  authorized  by  the  general  banking 
law  of  1845  been  taken  up  by  nearly  $2,000,000.  And  even  if  no 
more  banks  could  have  been  organized  under  the  law  of  1851,  the 
thirteen  free  banks  already  organized,  being  allowed  $500,000 
each,  might  have  taken  up  $6,500,000  in  all,  some  $5,700,000  of 
which  remained  unappropriated.  Had  all  this  capital  been  taken 
up  and  notes  issued  to  the  full  amount  authorized,  the  total  cir- 
culation would  certainly  not  have  fallen  short  of  $20,000,000, 
which  amount  it  was  claimed  Ohio  needed  at  that  time.40 

Depreciated  Currency  in  the  State.  —  It  is  likely  that 
Ohio  frequently  did  have  that  much  of  a  circulation,  such  as  it 
was,  even  during  the  years  1853  and  1855  which  show  so  de- 
cided a  contraction  in  the  authorized  circulation.  During  the 
summer  of  1854,  for  example,  it  is  said  the  currency  manufac- 
turers and  borrowers  never  had  been  busier.  The  home  cur- 
rency was  neglected,  it  is  true,  adjoining  states  were  ransacked 
for  banks  when  established,  in  order  to  borrow  circulation  from 
them,  or  to  establish  new  banks.  And  yet  money  was  scarce,  and 
eastern  exchange  more  so.  Ohio  borrowed  and  borrowed  every- 
body's credit  and  called  it  money,  and  the  more  she  borrowed 
the  less  real  money  she  had.  Many  Ohio  bankers,  interested  in 
banks  in  other  states,  encouraged  this  borrowing  propensity. 
They  were  aided  by  the  brokers,  many  of  whom  became  the  worst 


The  Central  Bank,  Indianapolis Judge  Brown   $323,000 

Upper  Wabash   Bank Marfield  of  Circle- 

ville    195,000 

Wayne    Bank,   Richmond Beckel  of  Dayton.. .  100,000 

Northwestern  Bank    Tallmadge  of  Lan- 
caster               300,000 

-Ohio  Exec.  Doc.,  1854,  No.  9,  p.  565. 
40  Ohio  Exec.  Doc.,  1854,  No.  9,  p.  566. 


222  Ohio  Arch,  and  Hist.  Society  Publications. 

species  of  banks  of  issue.  The  effect  was  to  introduce  into  the 
state  a  mass  of  foreign  paper  which  expelled  from  circulation 
not  only  nearly  all  the  coin,  but  also  much  of  the  paper  of  the 
home  banks,  thus  exposing  the  community  to  great  inconvenience 
and  loss.41 

For  several  years  Indiana,  Illinois,  Kentucky,  Virginia, 
Louisiana,  and  Michigan  supplied  the  currency  to  the  exclusion 
of  Ohio  bank  notes.  Thus  a  depreciated  currency  standard  was 
imposed  on  the  state.  As  the  currency  fell,  eastern  exchange 
rose ;  and  with  the  advance  in  exchange  there  was  a  rush  for 
the  redemption  of  all  the  Ohio  notes  that  were  easily  accessible. 
The  exchange  thus  drawn  from  Ohio  supplied  new  foreign 
issues,  and  through  them  a  constant  draft  upon  Ohio  was  kept 
up  by  the  brokers,  who  were  playing  into  the  hands  of  half  Ohio 
half  Indiana  bankers.  The  result  was  that  Ohio  bank  notes 
had  to  be  redeemed  five  or  six  times  a  year  or  oftener  in  eastern 
exchange.  As  each  redemption  cost  at  least  i%,  it  followed  that 
it  cost  some  6  to  10%  a  year  to  maintain  an  Ohio  circulation.12 
This  cost  was  the  great  obstacle  to  Ohio  circulation,  which  de- 
clined from  1 1. 8  millions  in  1851  to  8  millions  at  the  close  of 
1854.  During  the  same  period  the  specie  in  the  authorized  banks 
declined  from  2.8  millions  to  1.7  million.43 

Schemes  to  Avoid  Redemption.  —  To  avoid  the  continual 
draft  upon  them,  banks  resorted  to  those  schemes  so  prevalent  in 
former  years  so  to  pay  out  their  own  paper  as  to  drive  it  as 
far  from  home  as  possible,  while  about  home  they  circulated  for- 
eign paper.44  This  habit  had  been  common  prior  to  1850  and 
does  not  seem  to  have  been  confined  to  any  one  class  of  banks. 
About  the  time  the  State  Bank  of  Ohio  was  established  it  was 
generally  known  that  Ohio  banks  had  agencies  in  Illinois  to 


41  Message  of  Governor  Chase,  Jan.  4,  1858  —  Daily  Ohio  Statesman, 
Jan.  5,  1858. 

43  Ohio  Exec.  Doc.,  1854,  No.  9,  p.  566. 

Also  Ohio  Banks  (Baker).    Bankers'  Magazine,  11:171. 

43  See  Appendix,  p.  283. 

44  H.  F.  Baker  writing  of  Ohio  banks  in  1856  cites  an  instance  of 
an  old  and  wealthy  citizen  of  Cincinnati  writing  a  letter  to  the  city  coun- 
cil in  which  he  states  that  in  6  years  he  had  received  but  4  Cincinnati 
bank  notes.  —  Bankers'  Mag.,  11:174. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    223 

distribute  their  paper  for  circulation,  with  the  object  of  keeping 
it  at  a  distance  and  preventing  its  return  for  redemption.45  A 
little  later  these  agents  and  others  in  Iowa  were  reported  to  be 
telling  the  people  of  those  states  that  the  State  of  Ohio  was 
bound  for  the  redemption  of  the  notes  of  the  State  Bank  of 
Ohio.48  In  Ohio  branch  banks  in  distant  parts  of  the  state  were 
said  to  circulate  for  each  other,47  the  bills  being  regularly  ex- 
changed, package  for  package.48  Customers  of  a  bank  would 
frequently  be  given  notes  of  the  bank  only  under  a  promise  not 
to  pay  them  out  until  they  should  get  a  considerable  distance 
from  home,  the  object  being  to  keep  their  notes  in  the  hands  of 
people  who  were  too  far  away  to  offer  them  for  redemption  in 
gold  or  silver.49 

In  1851  a  special  bank  examiner,  A.  F.  Johnson,  commenting 
on  Ohio  banking  said  that  the  availability  of  specie  ever  since  re- 
sumption had  been  a  practical  delusion,  as  the  banks  employed 
the  financial  subterfuge  "of  circulating  or  paying  out  the  paper 
of  each  other,  and  while  deluding  the  people  with  the  cant  of 
paper  or  specie  at  the  will  of  the  holder,  the  circulation  of  each 
bank  was  found  as  far  from  the  place  of  issue  as  they  could  find 
men  to  carry  it  or  roads  to  travel."50  While  in  1854  the  report 
of  the  special  bank  examiner,  Charles  Reemelin,  shows  that  the 
practice  of  exchanging  notes  and  keeping  their  circulation  as 
far  from  the  bank  as  possible  was  still  common  to  all  the  banks  of 
the  State.  Ohio  bankers  have,  said  he,  like  many  other  bankers, 
"a  pernicious  hankering  for  always  circulating  among  the  people 


45  Daily  Ohio  Statesman,  Jan.  6,  1846. 

The  Commercial  Bank  of  Cincinnati  had  a  St.  Louis  "agency"  which 
became  a  federal  depositary.  —  U.  S.  H.  of  R.  Comm.  Reports,  1836-7, 
No.  193,  p.  598. 

46  Ohio  Press,  May  2,  1846. 

4T  Thus  the  Exchange  Branch  of  Columbus  circulated  in  that  city 
notes  of  the  Commercial  Branch  of  Cleveland  while  the  latter  circulated 
notes  of  the  former.  — Ohio  Press,  July  22,  1846. 

48  Cleveland  Times,  June  23,  1847. 

49  Cleveland  Times,  Sept.  8,  1847.     Also  Ohio  Press,  Oct.  28  and  31, 
1846. 

Cincinnati  Daily  Enquirer,  Mar.  10,  1846. 
60  Ohio  Exec.  Doc.,  1851,  Part  I,  p.  666. 


224  Ohio  Arch,  and  Hist.  Society  Publications. 

that  currency  which  the  people  have  the  least  chance  to  get  re- 
deemed; and  they  seem  to  regard  it  as  a  part  of  their  espirt  du 
corps  to  drive  all  bank  notes  as  far  as  possible  from  home."51 

The  Use  of  Banks  for  Deposits  and  Loans.  —  Through- 
out the  period  then  the  banks  seem  to  have  failed  to  give  Ohio 
a  good  home  currency.  They  also,  at  least  in  the  later  years, 
failed  to  regulate  trade.  Exchange  was  subjected  to  the  fluc- 
tuations incident  to  a  depreciated  currency,  resulting  in  incon- 
venience and  loss  to  the  whole  business  community.  Mr.  Reem- 
elin  in  1854  estimated  the  illegitimate  cost  to  the  state  from 
extra  exchange,  note  shaving,  and  broken  banks  at  $750,000  a 
year.52  And  H.  F.  Baker  in  his  history  of  Ohio  banks  two 
years  later  declared  this  amount  too  low,  in  view  of  the  fact 
that  the  exports  and  imports  of  Cincinnati  alone  for  that  year 
were  nearly  $9o,ooo,ooo.53 

The  chief  use  of  the  banks  was  coming  to  be  not  that  of 
furnishing  Ohio  a  home  currency,  nor  exchange  at  fair  rates, 
but  to  provide  a  gathering  place  where  surpluses  could  safely 
be  deposited,  to  be  loaned  to  such  as  needed  temporary  accommo- 
dations. The  capital  of  the  citizens  rather  than  that  of  the  banks 
had  for  months  done  the  business  of  Ohio.  Very  little  of  Ohio 
banking  capital  was  then  owned  outside  the  state.  Ohio  bank 
statistics  in  the  fall  of  1854  stood  somewhat  like  this: 

Capital  already  accepted  in  Ohio $6 , 000 , 000  M 

Discounts  from  this  capital 14,500,000 


Surplus  of  discounts  over  capital $8,500,000 

Of  which  the  deposits  account  for 6,200,000 


Leaving  but   $2,300,000 

to  be  provided  for  by  the  little  Ohio  circulation  remaining  after 
supplying  the  specie  and  exchange  required  by  law. 


61  Ohio  Exec.  Doc.,  1854,  No.  9,  p.  567. 

52  Ohio  Exec.  Doc.,  1854,  No.  9,  p.  563. 

53  Bankers'  Magazine,  11 :174. 
See  also  Appendix,  p.  297. 

64  Ohio  Exec.  Doc.,  1854,  No.  9,  p.  569. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    225 

All  this  was  Ohio  capital.  With  the  brokers  and  private 
bankers  the  case  is  still  clearer.  Practically  all  their  loans  came 
from  deposits.  The  growing  importance  of  the  deposits  relative 
to  the  capital  and  circulation  of  the  Ohio  Banks  during  the 
years  1851-4  may  be  seen  from  the  following: 

STATISTICS  OF  OHIO  BANKS  IN    MILLIONS  OF  DOLLARS.55 


Year. 
1851 

Capital. 
1  6 

Circulation. 
11  8 

Deposits. 
5  5 

1852    

78 

11  5 

6  0 

1853 

7  1 

11  4 

7  4 

1854    . 

8.0 

9.8 

7.7 

From  these  figures  it  may  be  deduced  that  while  the  ratio  of 
circulation  to  capital  dropped  from  155%  in  1851  to  123,%.  in 
1854,  during  the  same  period  the  ratio  of  deposits  to  capital 
rose  from  72%  to  96%.  Moreover,  while  the  circulation  showed 
an  absolute  decline  from  year  to  year,  the  deposits  showed  a 
constant  advance.  Thus  the  deposits  were  only  47%  as  large 
as  the  circulation  in  1851,  but  79%  in  i854.66 

Bank  Failures  in  1854.  —  The  day  had  not  yet  come, 
however,  when  the  deposit  function  exceeded  that  of  note  issue 
in  Ohio  banks.  The  figures  given  above  are  for  the  first  of  each 
year.  By  the  end  of  1854  the  circulation  had  still  further  de- 
clined, but  the  deposits  also  had  fallen  off.  Notwithstanding  the 


w  Report  of  Comptroller  of  Currency,  1876,  p.  CXVII. 

M  Most  of  the  banks  in  the  state  at  this  time  were  willing  to  pay  4% 
or  more  for  deposits  left  with  them  for  more  than  90  days.  —  Ohio 
Exec.  Doc.,  1854,  No.  9,  p.  567. 

The  increasing  importance  of  deposits  became  still  more  apparent 
towards  the  close  of  the  period,  as  may  be  seen  from  the  statistics  of  the 
free,  independent,  and  branch  banks  in  Ohio,  which  showed  the  following 
changes  from  1860  to  1863 : 

Decreased.      Increased. 

Capital   $800,424        

Circulation    1,882,576        

Discounts    881,050        

Specie    172,628        

Deposits    $6,195,036 

—  Kept.  O.  Com'r  Statistics,  Feb.  5,  1864,  p.  628. 
15 


226  Ohio  Arch,  and  Hist.  Society  Publications. 

contraction  in  the  circulation  of  the  authorized  banks  in  the 
state,  the  years  of  depreciated  currency  and  demoralized  banking 
had  produced  an  excessive  inflation  and  a  commercial  crisis. 
The  banks  of  the  state  organized  under  the  general  laws  received 
their  first  shock  in  1854,  when  at  the  time  of  the  crisis  in  the 
stock  market  at  New  York  the  Ohio  valley  was  the  scene  of  a 
bank  crisis.57  During  the  three  years  1852-4,  fourteen  of  the 
authorized  banks  in  Ohio  failed,  or  closed  up  for  other  reasons. 
Of  these,  ten  disappeared  from  the  state  auditor's  reports  in  the 
year  1854,  three  of  them  being  old  banks,  three  free  banks,  two 
independent  banks,  and  two  branches  of  the  state  bank.58 

Condition  of  Remaining  Banks.  —  Of  the  four  classes  of 
banks  in  the  state  then,  there  remained  at  the  close  of  1854  but 
one  old  bank,  nine  independent  banks,  ten  free  banks,  and  thirty- 
seven  branches  of  the  state  bank.  The  old  bank  was  the  Ohio 
Life  Insurance  and  Trust  Company  of  Cincinnati.  The  capital 
of  this  institution  was  $2,000,000,  only  about  $600,000  of  which, 
however,  was  employed  in  its  banking  business,  the  remainder 
being  used  in  the  insurance  and  trust  department.  This  com- 
pany was  conservative  and  its  business  said  to  be  conducted  in 
the  most  careful  manner.59  The  branches  of  the  state  bank,  too, 


57  Banking  in  All  Nations,  1:442  and  4. 
Cincinnati  Daily  Enquirer,  No.  9,  1854. 

For  failure  of  important  private  banks  in  Cincinnati  see  preceding 
page  217. 

58  The   charters   of   two   of   these   old  banks   expired   Jan.    1,    1854. 
The  charters  of  two  others,  the  Bank  of  Circleville  and  the  Bank  of 
Massillon,  were  to  expire  in  1855,  but  both  became  insolvent  and  were 
ranked  among  the  broken  banks  of  the  state  before  the  end  of  1854. 

The  Bank  of  Massillon  failed  in  November,  1853,  close  upon  the 
failure  of  H.  Dwight  of  New  York  City,  its  principal  owner,  who  had 
used  practically  all  its  circulation  in  building  the  Cleveland  &  Pittsburg 
and  the  Chicago  &  Mississippi  Railroads.  The  last  report  of  the  bank 
showed  that  Dwight  had  $350,000  of  its  means  subject  to  sight  draft. 
Its  capital  was  $200,000,  of  which  he  owned  $170,000.  —  See  Cleveland 
Plain  Dealer,  Nov.  7,  1853,  and  Cincinnati  Daily  Enquirer,  Nov.  19  and 
Dec.  3,  1854. 

For  branches  of  State  Bank  which  failed  in  1854,  see  Note,  p.  255. 

59  Men  and  Measures  of  Half  a  Century  —  McCulloch,  p.  132. 
Hunt's  28:736. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    227 

were  generally  regarded  as  sound  and  enjoyed  the  utmost  public 
confidence.60 

The  free  bankes  and  the  independent  banks,  however,  the 
special  bank  examiner  in  October  1854  placed  in  three  classes : 
Safe  and  doing  a  legitimate  business,  6;  Guilty  of  some  one  or 
other  improper  practice,  8;  More  or  less  liable  to  censure  and 
loss,  8.61  Of  these,  one  independent  bank  and  two  free  banks 
failed  before  the  end  of  the  year,  leaving  but  57  authorized  banks 
still  in  active  operation  in  Ohio  on  the  first  day  of  January 
i855-62 


60  Ohio  Banks  — Baker.      Bankers'  Magazine  11:167. 

81  In  Class  No.  1,  was  but  one  free  bank,  the  Bank  of  Commerce, 
Cleveland ;  the  five  independent  banks  were  the  Franklin  Bank  of  Zanes- 
ville,  Bank  of  Geauga,  City  Bank  of  Cleveland,  Mahoning  County  Bank, 
and  the  Western  Reserve  Bank  at  Warren. 

In  Class  No.  2,  were  two  independent  banks,  the  Commercial  Bank 
at  Cincinnati  and  the  Canal  Bank  at  Cleveland ;  and  six  free  banks, 
Champaign  County  Bank  at  Urbana,  Merchants'  Bank  at  Massillon,  Bank 
of  Marion,  Franklin  Bank  of  Portage  County,  Pickaway  County  Bank 
at  Circleville,  and  the  Springfield  Bank. 

In  Class  No.  3,  were  three  independent  banks,  Sandusky  City  Bank, 
City  Bank  of  Cincinnati,  and  the  City  Bank  of  Columbus;  and  five  free 
banks,  Savings  Bank  of  Cincinnati,  Stark  County  Bank  at  Canton,  Union 
Bank  of  Sandusky,  Forest  City  Bank  of  Cleveland,  and  the  Iron  Bank  of 
Ironton.  —  Ohio  Exec.  Doc.,  1854,  No.  9,  p.  557. 

62  For  statistics  of  condition  see  Appendix,  pp.  280,  286. 

The  Canal  Bank  of  Cleveland  failed  to  redeem  its  notes  in  Novem- 
ber, 1854,  and  was  placed  in  the  hands  of  a  receiver.  —  Magazine  of 
Western  History,  2:287. 


CHAPTER  XII. 
BANK  TAXATION  IN  OHIO  BEFORE  THE  WAR. 

Decline  in  Banking  Facilities  attributed  to  Tax  Laws. — 
A  large  part  of  the  decrease  in  the  number  of  banks  during  the 
years  following  the  new  constitution  was  attributed  by  the  banks 
to  adverse  legislation.  The  party  then  in  power  was  credited 
with  a  hostility  to  all  banks.  Their  opponents  had  charged  them 
with  trying  to  frame  the  new  constitution  so  as  to  admit  of 
legislation  which  would  crush  the  banks.  That  plan  failing,  these 
critics  assert,  they  then  turned  to  the  taxing  power  as  a  means 
of  waging  war  on  the  banks.1  That  this  party  the  same  year 
the  new  constitution  was  adopted  passed  the  free  banking  law, 
thus  throwing  open  the  opportunities  to  engage  in  banking,  did 
not  prevent  even  the  free  banks  themselves  from  heaping 
criticisms  upon  the  tax  laws. 

The  decline  in  the  circulation  of  the  authorized  banks  begin- 
ning in  1851  and  the  drop  in  capital  and  loans  in  1852  were  at 
once  attributed  to  the  tax  laws  of  those  years.  The  Bankers' 
Magazine  in  July,  1853,  states :  "The  severe  tax  laws  of  Ohio, 
adopted  within  the  last  two  years,  have  had  a  depressing  effect 
upon  the  banking  system  and  facilities  of  that  state." ;  Mr. 
Henry  F.  Baker,  writing  in  the  same  year,  observes :  "It  is  such 
laws  as  these  which  stimulate  reckless  financiers  to  artifices  and 
schemes  of  evasion,  wholly  at  variance  with  the  principles  of 
sound  banking."3  While  in  1854  the  banks  themselves  almost 
uniformly  held  up  the  tax  law  as  the  scape  goat  of  all  their 
financial  troubles.4 

Taxation  of  Dividends  or  Profits  prior  to  1850.  —  With- 
out doubt  the  legislation  on  the  subject  of  taxing  the  banks  had 


1  Daily  Commercial  Register  (Sandusky),  March  2,  1853. 
Banking  in  All  Nations,  1 :442. 

2  Bankers'  Magazine,  8  :85. 

3  Banks  and  Banking  in  the  United  States  —  H.  F.  Baker,  p.  40. 

4  Report  of  Bank  Examiner  Reemelin,  Oct.  1^  1854. 

(228) 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    229 

been  varied  and  somewhat  vacillating.  Prior  to  the  general 
banking  law  of  1845  tne  general  principle  followed  had  been 
that  of  a  tax  on  dividends.5  And  the  law  of  February  24,  1845, 
authorizing  the  State  Bank  of  Ohio  and  other  banking  companies 
required  the  banks  to  pay,  in  lieu  of  the  tax  on  dividends,  6% 
on  the  profits  after  deducting  expenses  and  ascertained  losses.6 
The  banks  organized  under  this  law  paid  this  6%  tax  for  several 
years  without  question  and  the  arrangement  was  generally  con- 
sidered as  a  contract  binding  on  both  state  and  banks. 

The  old  banks  then  in  the  state  were  by  their  charters  made 
subject  to  a  tax  of  5%  on  their  dividends  as  provided  by  the 
tax  law  of  March  12,  1831,  and  such  taxes  as  might  be  imposed 
by  law.  This  law  was  amended  March  2,  1846,  the  same  day 
the  Ohio  legislature  passed  the  Alfred  Kelley  general  property 
tax  law,  and  all  the  banks  except  the  Ohio  Life  Insurance  Co. 
and  those  organized  under  the  State  Bank  law,  were  required  to 
set  O'ff  for  the  state  6%,  of  their  gross  profits  in  lieu  of  the  tax 
on  dividends.7  The  general  property  tax  law  provided  for  as- 
sessing and  taxing  property  according  to  its  money  value,  but 
the  taxing  of  the  banks  only  on  their  profits  was  held  out  as  a 
bonus  for  foreign  capital.8 


5  See  preceding  pages.    Also  Index. 

Pennsylvania,  in  1814,  was  the  first  state  to  adopt  this  form  of  bank 
taxation.  Virginia  and  Ohio  were  the  only  other  states  which  began 
and  for  some  time  continued  to  tax  banks  on  dividends,  though  Vermont 
and  some  others  sometimes  inserted  charter  provisions  reserving  to  the 
state  part  of  the  profits.  —  Essays  on  Taxation  —  Seligman,  p.  143. 

"Ohio  Laws,  43:24. 

Some  of  the  banks  construed  this  so  as  to  make  the  6%  payable  to 
the  state  part  of  the  expenses  and  to  be  deducted  before  setting  off  the 
state's  share,  thus  giving  the  state  a  smaller  share.  To  settle  this  ques- 
tion the  state  brought  suit  against  the  Franklin  Branch  in  Columbus,  one 
of  the  banks  which  deducted  the  6%  as  an  expense.  The  court  held  that 
this  6%  was  not  a  part  of  the  expenses,  but  rather  a  part  or  share  of  the 
dividend  of  profits,  and  gave  judgment  for  the  state.  —  Bankers'  Maga- 
zine, 4:412  (1849).  — Hunt's  Merchant's  Magazine,  22:103  (1850). 

7  Ohio  Laws,  44:121. 

The  O.  L.  I.  &  T.  Co.  still  paid  5%  on  its  dividends. 

9  Message  of  Gov.  Medill,  Jan.  7,  1856  —  Cincinnati  Daily  Enquirer, 
Jan.  9,  1856. 


230  Ohio  Arch,  and  Hist.  Society  Publications. 

Tax  on  Capital  Stock  and  Surplus  in  1850  and  1851.- 
For  some  years  then  there  was  more  or  less  agitation  for  a  law 
taxing  banks  on  their  loans  and  discounts,  with  the  idea  of  get- 
ting at  their  real  capital  in  trade.9  Finally  an  act  was  passed 
March  23,  1850  providing  that  each  bank,  whose  charter  did  not 
provide  another  mode  of  tax,  should  report  the  amount  of  its 
capital  and  surplus  and  be  taxed  on  that  sum  at  the  same  rate 
as  was  assessed  on  money  at  interest  at  the  place  where  the 
bank  was  located.10  Banks  taxed  specially  could  consent  to  this 
act  and  come  under  it.  The  idea  was  to  tax  banks  just  as  other 
property  was  taxed.  The  Whigs  and  Free  Soilers  all  advocated 
this  law  and  the  Democrats,  or  Locofocos  as  they  were  called, 
almost  all  opposed  it.11 

By  January,  1851,  five  banks  had  accepted  the  terms  of  this 
act.  Thus  there  was  quite  a  diversity  of  bank  taxation  in  the 
State.  The  Ohio  Life  Insurance  and  Trust  Co.,  for  example, 
under  its  charter  was  taxed  but  5%.  on  its  dividends,  the  new 
banks  organized  under  the  State  Bank  law  of  1845  paid  6%  upon 
their  profits,  except  those  that  accepted  the  terms  of  the  act  of 
March  23,  1850;  these  paid  the  regular  property  tax  rate  on 
their  capital  stock  and  surplus  fund.12 

On  March  21,  1851,  the  legislature  passed  a  law  taxing 
banks  and  other  stocks  the  same  as  other  property  in  the  State 
was  taxed.13  This  placed  the  tax  on  capital  stock  and  surplus 
the  same  as  the  law  of  March  23,  1850,  but  its  provisions  were 
general  and  applied  to  all  banks  then  existing  or  afterwards  to 
be  established  in  the  state,  unless  exempted  by  contract.14.  That 
this  law  did  increase  the  taxes  on  the  banks  is  shown  by  the 
state  auditor's  report  for  1851  which  gives  the  total  taxes  paid 
by  the  banks  under  the  act  of  March  21,  as  $129,722.58,  while 


9  Ohio  Press,  Jan.  6,  1847.     Ohio  Ex.  Doc.,  1848,  Part  2,  p.  536. 
Ibid.,  1850,  Part  1,  p.  359. 

10  Ohio  Laws,  48 :88. 

"Belmont  Chronicle,  March  29,  1850. 

12  State  Auditor's  Report. 
Cleveland  Herald,  Jan.   16,   1851. 

13  Ohio  Laws,  49 :56. 

"Ohio  L.  I.  &  T.  Co.  vs.  Henry  Debolt  — 16  Howard  439. 


Banking  and  Currency  in  Ohio  Before  the  Ciml  War.    231 

if  they  had  been  taxed  on  their  profits  alone  the  tax  would  have 
been  only  $64,104.52. 15 

Opposition  to  Tax  Law  of  1851.  —  By  March  1852  five 
independent  and  seven  branch  banks  had  placed  themselves  under 
these  acts  of  1850  and  185 1.10  The  majority  of  the  banks  or- 
ganized under  the  law  of  1845,  however,  opposed  the  law,  and 
May  22,  1851,  the  board  of  control  of  the  state  bank  adopted 
resolutions  asserting  that  it  was  inexpedient  for  the  branches  to 
waive  their  constitutional  and  charterde  rights  and  consent  to 
be  taxed  under  the  act  of  March  21,  185 117  A  test  case  was 
submitted  to  the  State  Supreme  Court,  which  held  that  the  act 
of  1845  contained  no  contract  on  the  part  of  the  state  not  to 
change  the  mode  or  amount  of  taxation.  The  Supreme  Court 
of  the  United  States,  however,  at  the  December  term  1853, 
overruled  this  decision,  and  held  that  the  act  of  1851  impaired 
the  obligation  of  a  contract  and  was  therefore  void.18 

Tax  on  Loans  and  Discounts.  —  Meanwhile  the  new  con- 
stitution was  adopted  in  June,  1851,  containing  clauses  provid- 
ing that  all  property,  personal  or  real,  should  be  taxed  by  a 
uniform  rule;  and  that  laws  should  be  passed  taxing  notes  and 
bills  discounted  or  purchased,  moneys  loaned,  and  all  other  prop- 
erty of  all  banks  then  existing  or  afterwards  created  in  the  state 
so  that  all  property  employed  in  banking  should  always  bear  a 
burden  of  taxation  equal  to  that  imposed  on  the  property  of 
individuals.19  In  accordance  with  these  clauses  a  law  was 
passed  April  13,  1852,  requiring  that  all  banks  of  issue  should 
make  returns  under  oath  of  the  average  amount  of  their  notes 
and  bills  discounted  or  purchased,  on  which  any  profit  was 


15  Ohio  Exec.  Doc.,  1851,  Part  I,  p.  629. 

16  State  Auditor's'  Report,  March  16,  1852. 

17  State  Bank  of  Ohio  —  Janney,  p.  172.     The  Bankers'  Magazine  of 
July,  1853   (p.  85),  stated:     "The  tax  law  of  1851  is  so  oppressive  that 
several  of   the   banks   have   opposed  it   in   the   courts   while   others  have 
concluded  to  go  into  liquidation  and  place  their  means  where  the  law  of 
contracts  is  more  strictly  adhered  to,  and  where  capitalists  are  not  looked 
upon  as  the  enemies  of  the  poor  man  and  laborer." 

18  Piqua  Branch  State  Bank  vs.  Knoop,  16  Howard  369. 

19  Art.  12,  Sees.  2  and  3. 

20  Ohio  Revised  Statutes,  1854,  p.  907. 


232  Ohio  Arch,  and  Hist.  Society  Publications. 

earned;;  also  of  the  average  amount  of  all  their  other  moneys, 
effects  or  dues,  which  were  loaned  or  otherwise  used  with  a  view 
to  profit.20.  On  these  amounts  they  were  then  to  be  taxed  at 
the  same  rate  which  individual  property  paid. 

Refusal  of  Banks  to  Pay  the  Tax.  —  These  provisions 
the  banks  considered  very  oppressive  and  unjust,  claiming  that 
they  were  thus  taxed  on  three  times  the  amount  of  their  capital, 
or  what  individuals  would  pay  on  the  same  capital.  Many  banks 
refused  to  pay  the  tax  and  carried  the  matter  into  the  courts, 
claiming  that  if  they  were  not  sustained  they  would  have  to  go 
out  of  existence.21  Several  banks  actually  did  close,  change  to 
private  banks,  or  withdraw  part  of  their  circulation,  assigning 
the  tax  law  as  the  reason.22  The  feeling  against  the  law  was 
very  bitter  on  the  part  of  the  banks.  On  the  other  hand  their 
intense  opposition,  carried  to  the  point  of  refusing  to  pay  the 
tax,  aroused  strong  resentment  among  those  charged  with  the 
enforcement  of  the  law,  and  the  legislators,  and  their  friends 
throughout  the  state,  responsible  for  its  existence.  A  report  of 
the  auditor  of  state  February  12,  1853,  said:  "But  few  of  the 
banks  of  Ohio  have  paid  the  taxes  assessed  against  them  under 
the  provisions  of  the  act  of  April  13,  1852.  This  delinquency  is 
not  a  matter  of  accident,  but  is  attended  by  circumstances  which 
betray  the  existence  of  a  conspiracy  to  trample  upon  and  over- 
ride the  very  authority  which  gave  the  conspirators  their  corpo- 
rate existence." 

The  Crow  Bar  Law  of  1853.  —  A  bill  to  enforce  the  col- 
lection of  the  bank  taxes  was  even  then  before  the  legislature. 


21  Daily    Commercial     Register     (Sandusky),     May    27,    1852,     and 
Feb.  12,  1853. 

22  In  April,   1852,  the   Dayton   Bank,   an   independent  bank,   decided 
to  wiwd  up,  saying  that  their  taxes  would  have  been  $6,000  as  compared 
with  $1,100  the  year  before.     About  the  same  time  the  Franklin  Branch 
Bank  of  Cincinnati  closed  as  a  bank  and  the  firm  of  Groesbeck  &  Co. 
took  its  place,  the  view  being  expressed  that  the  tax  was  much  less  on 
brokers  than  on  banks.    At  this  time,  too,  the  Xenia  Branch  of  the  State 
Bank  decided  to  withdraw  40%  of  its  circulation    ($110,000)   and  retire 
a   proportionate   amount    of    its    capital    stock,    claiming   that    the    taxes 
assessed  on  the  branch  were  three  times  as  much  as  on  property  in  other 
business.  —  Cleveland  Herald,  May  1,  7  and  8,  1852. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    233 

It  was  opposed  by  the  Whigs  and  by  some  of  the  Democrats, 
especially  the  bankers  in  the  party;23  nevertheless  on  March  14, 
1853,  it  became  a  law.24  This  was  the  famous  "Crow  Bar  Law/' 
so  called  because  it  provided  that  if  the  taxes  assessed  under 
the  act  of  April  13,  1852,  were  not  paid  by  December  21  of  any 
year  a  penalty  of  5%  should  be  added;  then  if  not  paid  within 
5  days,  the  county  treasurer  should  enter  the  vaults  of  the  bank 
by  force,  if  necessary,  and  seize  sufficient  money  or  other  prop- 
erty to  pay  the  taxes  and  the  5%,  penalty,  together  with  a  5% 
poundage  and  all  the  costs  of  the  seizure  and  any  sale  that  might 
be  necessary. 

This  was  actually  done  in  the  case  of  the  Commercial  Bank 
of  Cleveland,  the  money  being  seized,  and  marked,  and  placed 
for  safe  keeping  in  the  vaults  of  the  Cleveland  Insurance  Com- 
pany. The  banks  had  assigned  their  interest  in  the  amount  to 
J.  G.  Deshler  of  Buffalo,  who  immediately  began  suit  by  writ 
of  replevin  in  the  United  States  Court  at  Columbus.  The  United 
States  marshal  forced  the  vaults  of  the  insurance  company  at 
night,  obtained  the  marked  money,  and  brought  it  into  court. 
The  law  was  declared  unconstitutional.25 

In  1854  the  tax  law  of  April  13,  1852,  was  also  declared 
unconstitutional  so  far  as  it  related  to  the  banks  organized  by 
the  law  of  1845,  the  United  States  Supreme  Court  holding  that 
the  fact  that  the  Ohio  constitution  permitted  such  a  tax  did  not 
release  the  State  from  its  contract.26 


23  Daily  Commercial  Register,  Jan.  28,  1853. 

Mr.  Beckel,  a  prominent  Democratic  bank  president  of  Dayton, 
was  one  of  those  active  in  opposition  to  the  law. 

24  Ohio  Laws,  51 :476. 

25  Daily  Commercial  Register,  March  28,  1853. 

Banks  and  Bankers  of  Cleveland  —  Magazine  of  Western  Hist., 
2:290.  Knox,  p.  684. 

After  the  Republicans  again  came  into  power  in  the  legislature  the 
"Crow  Bar  Law"  was  repealed  by  the  act  of  Feb.  26,  1857. 

28  Dodge  vs.  Woolsey  — 18  Howard  331. 

The  Cincinnati  Enquirer  called  the  decision  a  blow  at  state  sover- 
eignty, the  view  having  been  held  by  the  dominant  party  in  the  state  that 
the  power  of  taxation  was  an  act  of  sovereignty  which  one  legislature 
could  not  part  with  in  perpetuity.  —  See  Cincinnati  Daily  Enquirer, 
May  30,  1854,  and  Feb.  26,  1856. 


234  Ohio  Arch,  and  Hist.  Society  Publications. 

Kelley's  Bank  Tax  Law  of  1856.  —  In  the  fall  election  of 
1855  the  Republicans  were  victorious  and  April  I  and  8,  1856, 
new  laws  were  passed  which  provided  in  effect  that  all  banks, 
including  those  organized  under  the  law  of  1845,  should  report 
their  capital  stock,  surplus,  contingent  fund,  and  undivided 
profits,  as  the  basis  of  taxation  and  be  placed  on  the  duplicate 
as  other  property  of  the  state.27  Under  this  system  the  banks 
were  taxed  for  two  years  without  any  serious  objection  on  their 
part.28  It  was  asserted  by  some,  however,  that  thus  thousands 
of  dollars  of  bank  capital  were  exempted  from  taxation  resulting 
in  the  decline  in  the  amount  of  personal  property  from  297  mil- 
lion in  1854  and  283  million  in  1855  to  263  million  in  1857  and 
240  million  in  i858.29 

Vacillating  Character  of  Rest  of  Period.  —  In  the  fall  of 
1857  tne  radical  party  made  gains  in  the  legislature  and  on  April 
12,  1858,  acts,  amending  the  laws  of  March  23,  1850,  April  13, 
1852,  and  April  i,  1856,  were  passed,  which  provided  for  assess- 
ing and  taxing  all  property  in  the  state  according  to  its  true  value 
in  money;  and  it  was  then  provided  that  each  bank  should  make 
an  annual  statement  to  the  county  auditor  showing  the  average 
amount  of  loans  and  discounts,  on  which  any  profits  were  earned, 
and  the  average  amount  of  all  other  moneys,  etc.,  employed  with 
a  view  to  profit  (except  the  average  specie  reserved  to  redeem 
notes  and  pay  depositors,  and  also  average  amount  of  balance 
due  from  banks  on  which  no  interest  was  received).  These 
amounts  were  then  to  be  placed  on  the  duplicate  and  taxed  as 
other  property.30  Many  of  the  drastic  features  of  the  1853  law 
were  re-enacted  and  again  the  independent  and  branch  banks 
refused  to  pay  the  tax.  They  claimed  that  the  acts  taxing  them 
in  a  way  different  from  that  provided  in  the  law  of  1845  im- 
paired the  obligation  of  a  contract ;  and  their  contention  was  up- 
held by  the  United  States  Supreme  Court. 


27  Ohio  Laws,  53:51  and  216. 

The  latter  act  was  known  as  Kelley's  Bank  Tax  Law. 

28  Annual  Report  of  State  Auditor,  Jan.  1,  1860,  p.  16. 

29  Ohio  Statesman,  Dec.  29,  1858. 

30  Ohio  Laws,  55 :52  and  128. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    235 

These  acts  were  repealed  by  the  general  tax  law  of  April  5, 
1859,  but  the  method  of  taxing  banks  remained  the  same  as 
provided  in  1858,  except  that  banks  organized  under  the  law  of 
1845  should  make  returns  to  the  state  auditor  instead  of  the 
county  auditor.  Upon  refusal  or  neglect  by  any  bank  to  make 
the  returns  required,  the  amount  was  to  be  ascertained  from  the 
quarterly  reports  and  50%  added  to  it.31  These  banks  continued 
to  resist  collection  of  the  tax  and  the  state  had  much  litigation 
and  but  little  revenue  from  them  under  this  law. 

An  act  of  Apr.  4,  1861,  however,  changed  the  above  so  as 
to  make  capital  stock,  undivided  profits,  and  deposits  the  basis 
on  which  banks  should  be  taxed.32  This  law  was  much  more 
successful  in  its  results  and  remained  in  force  during  the  rest 
of  the  period  covered  in  this  monograph.  The  banks  organized 
under  the  1845  law  generally  accepted  this  plan  and  proceeded 
to  pay  their  taxes  as  the  new  law  provided,  their  back  taxes 
however  being  paid  as  provided  in  the  law  of  1845.  Inducement 
for  the  others  to  fall  in  line  was  offered  early  in  1862  when  most 
of  the  banks  in  the  United  States,  except  in  Ohio,  Indiana,  and 
Kentucky,  had  suspended  owing  to  the  war.  An  Ohio  law  was 
passed  Jan.  16,  1862,  permitting  temporary  suspension  of  specie 
payment  by  all  Ohio  banks,  except  those  that  refused  to  accept 
the  tax  law  of  i86i.33 

The  1861  law  was  repealed  by  that  of  Apr.  16,  1867,  which 
also  amended  the  act  of  Apr.  5,  1859.  This  law  provided  that 
real  estate  of  the  bank  be  taxed  where  located,  as  other  property, 
and  required  that  the  shares  of  the  banks  stock  be  listed  and 
taxed  where  the  bank  was  located.  The  banks,  however,  could 
pay  the  tax  on  the  shares  and  take  it  out  of  the  dividends.34 
This  plan  with  some  modification  remained  in  use  in  Ohio  until 
the  close  of  the  century.35 


31  Ohio  Laws,  56 :175-218. 

32  Ohio  Laws,  58 :59. 

83  Ohio  Laws,  59:3.    Exec.  Doc.,  1861.     Vol.  II,  p.  251. 
Bankers'  Magazine,  12:961. 

84  Ohio  Laws,  64  :204. 

85  Taxation  in  Ohio  —  Evans,  p.  48. 


CHAPTER  XIII. 

THE  BANK  OF  OHIO,  PANIC  OF  1857,  AND  NOTE  REDEMPTION 

AGENCIES. 

Further  Decline  in  Banking  Capital  in  1855.  —  Notwith- 
standing the  fact  that  by  1855  the  Supreme  Court  had  declared 
unconstitutional  both  the  obnoxious  tax  laws  of  1851  and  1852, 
which  the  banks  organized  under  the  law  of  1845  nad  pronounced 
the  great  obstacle  to  their  progress,  yet  the  capital  of  the  au- 
thorized banks  in  Ohio  continued  to  decrease.  In  May  1855 
another  branch  of  the  State  Bank  failed  and  was  closed  by  the 
board  of  control;1  while  from  January  to  November  of  that 
year  the  capital  of  the  independent  banks  decreased  $169,340, 
the  decrease  during  the  year  for  all  the  authorized  banks  being 
$675,ooo.2  Meanwhile  the  influx  of  foreign  bank  notes  still 

Act  to  Incorporate  the  Bank  of  Ohio  and  other  Banks.  — 
In  January  1856  the  newly  elected  Republican  governor,  Salmon 
P.  Chase,  in  his  inaugural  address  to  the  legislature  called  at- 
tention to  the  failure  to  exclude  the  paper  of  banks  from  other 
states,  adding:  "Public  sentiment  demands  an  increase  of  bank- 
ing capital,  organized  under  our  own  laws,  contributing  in  just 
measure,  to  our  own  revenues,  and  sufficient  to  furnish  the  neces- 
sary facilities  for  the  transaction  of  business."  He  then  pointed 
out  that  the  constitution  provided  for  the  authorizing  of  new 
banks  by  the  legislature,  the  act  then  to  be  submitted  to  a  vote 
of  the  people  and  not  to  take  effect  unless  approved  by  a  ma- 
jority vote.3  He  also  suggested  the  repeal  or  amendment  of  the 
10%  interest  law,  saying:  "There  seems  to  be  no  valid  reason 


xOn  May  23,  1855,  the  Commercial  Branch  of  Toledo  was  placed 
under  the  care  of  the  executive  committee,  and  funds  were  provided  to 
redeem  its  circulation  and  the  branch  closed.  —  State  Bank  of  Ohio  — 
Janney,  p.  169. 

2  Report  of  Comptroller  of  Currency,  1876,  p.  CXVII. 
continued. 

3  Cincinnati  Daily  Enquirer,  Jan.  15,  1856. 

(236) 


Banking  and  Currency  in  Ohio  Before  the  Civil  Wwr.    237 

why  the  capitalists  should  be  encouraged  to  demand  so  large  a 
proportion  of  the  earnings  of  the  produce  and  the  profits  of  the 
manufacturer  and  the  merchant." 

The  latter  suggestion  did  not  result  in  the  desired  legislation, 
one  argument  advanced  being  that  10%  interest  rate  tended 
to  draw  foreign  capital  into  the  state.4  The  former  recommen- 
dation, however,  met  with  the  approval  of  the  legislature,  and 
on  April  n,  1856  it  passed  an  act  "to  incorporate  the  Bank  of 
Ohio  and  other  Banks."  This  act  was  similar  in  its  general  pro- 
visions to  the  law  of  i845.5  It  was  to  be  submitted  to  popular 
vote  at  the  October  election  and  if  approved  was  to  take  effect 
at  once  and  continue  until  1877. 

Objections  to  the  Proposed  Banking  Law.  —  Opposition 
to  the  proposed  banking  law  soon  began  to  develop,  however. 
The  law  contained  an  individual  responsibility  clause,  a  limita- 
tion of  the  rate  of  interest,  and  a  restriction  on  the  indebtedness 
of  stockholders  and  directors.  Some  objected  to  these.  Others 
objected  to  the  requirements  to  pay  out  nothing  but  gold  or  silver 
or  the  notes  of  specie-paying  Ohio  banks.  Still  other  objected 
to  the  deposits  required  with  the  state  treasurer.6  The  act 
also  prohibited  the  legislature  "from  imposing  any  greater  tax 
upon  property  employed  in  banking  under  this  act  than  is  or 
may  be  imposed  upon  the  property  of  individuals."  This  clause, 
too,  met  opposition.  The  result  was  that  the  act  was  not  ap- 
proved by  a  majority  of  all  the  electors  voting  at  the  October 
election  and  failed  to  become  a  law.7 

Governor  Chase  favors  Free  Banking.  —  Soon  after  that 
the  Supreme  Court  of  Ohio  unanimously  decided  that  the  act  to 
authorize  free  banking  passed  March  21,  1851,  but  supposed  by 
many  to  have  been  abrogated  by  the  new  constitution  adopted  in 
June  1851,  remained  in  full  force  unaffected  by  any  provision  of 
that  instrument.  So  when  Governor  Chase  delivered  his  next 
message  to  the  legislature  in  January  1857,  ne  remarked  that 
public  opinion  still  remained  divided  as  to  whether  the  privilege 


4  Ibid.,  March  15,  1856. 

5  Report  of  Comptroller  of  the  Currency,  1876,  p.  XXVII. 

6  Cincinnati  Daily  Enquirer,  May  25,  1856. 

7  Daily  Ohio  Statesman,  Jan.  6,  1857. 


238  Ohio  Arch,  and  Hist.  Society  Publications. 

of  banking  should  be  limited  to  a  definite  number  of  institutions 
or  extended  to  all  who  were  willing  to  give  the  required  se- 
curities and  guaranties  against  abuse;  but  he  expressed  his  own 
preference  for  the  most  liberal  extension  of  the  privilege  with 
such  restrictions  upon  its  exercise  as  would  effectually  protect 
the  community  against  a  mere  paper  money  currency. 

He  then  suggested  to  the  legislature  the  expediency  of  ob- 
serving the  practical  operation  of  the  free  banking  act  of  1851, 
and  of  so  amending  it  from  time  to  time  as  might  be  necessary 
to  protect  and  secure  the  interests  of  the  community,  without 
invoking  the  decision  of  the  people  upon  a  new  banking  law.8 

Another  State  Bank  Law  rejected  by  the  Voters.  —  The 

State  Bank  advocates,  however,  were  not  yet  willing  to  adopt  the 
governor's  recommendation.  Two  weeks  later  Mr.  Kelley  intro- 
duced into  the  Senate  another  bank  bill,9  which  soon  after  passed 
the  legislature  as  an  act  "to  incorporate  the  Bank  of  Ohio  and 
Branches."10  This  act  was  similar  to  that  rejected  by  the  people 
in  1856,  but  omitted  the  part  providing  for  independent  banks. 
Provision  was  made  for  submitting  it  to  popular  vote;11  but 
when  the  election  came  off,  it  was  found  to  have  suffered  the 
same  fate  as  its  predecessor  of  the  year  before.  As  the  governor 
remarked  in  his  next  message,  it  could  then  properly  be  con- 
sidered as  settled  that  the  majority  of  the  electors  did  not  desire 
the  further  creation  of  institutions  of  the  character  proposed.12 
This  ended  the  legislative  acts  for  a  Bank  of  Ohio  with  branches. 
The  people  of  the  state  themselves  had  decided  in  favor  of  the 
more  democratic  free  banking  system.13 


8  Governor  Chase's  Message,  Jan.  5,  1857. 

9  Daily  Ohio  Statesman,  Jan.  23,  1857. 

10  Ohio  Laws,  54:140. 

11  Ohio  Laws,  54  :78. 

12  Daily  Ohio  Statesman,  Jan.  5,  1858. 

13  An  act  of  May  21,  1894,  repealed  the  law  of  Feb.  24,  1845,  which 
authorized  the  State  Bank  of  Ohio  and  the  independent  banks.    It  also 
repealed  the  acts  of  Jan.  6,  1846;  Feb.  24,  1848;  March  8,  1850;  March  22, 
1851 ;  March  14,  1859,  and  April  25,  1862.    And  Ohio  today  has  a  modified 
form  of  the  free  banking  law  of  1851.  — Ohio  Laws,  91:338  (1894). 

Knox,  p.  690. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    239 

Distribution    of     Ohio    Banks    in    January     1857.  —  In 

January,  1857  there  were  60  banks  in  Ohio,  I  old  bank,  10 
independent  banks,  13  free  banks,  and  36  branches  of  the  state 
bank.  These  were  well  distributed  throughout  the  state,  being 
located  in  41  counties  and  45  different  towns  or  cities.  Cleveland 
had  5,  Cincinnati,  Columbus,  and  Chillicothe  had  3  each,  five 
other  towns  had  2  each  and  the  remaining  places  had  but  one 
bank  apiece.  As  compared  with  1847  Cleveland  had  gained  one 
bank  and  Cincinnati  had  lost  3.  The  total  capital  of  all  the 
banks  was  $5,871,822,  which  on  the  basis  of  the  population  in 
1860  means  a  capital  of  $2.51  per  capita.  This  figure  was  about 
the  same  as  in  1847,  but  the  per  capita  figures  for  the  different 
counties  show  greater  uniformity  in  1857,  only  one  county,  Ross, 
having  as  much  as  $10  per  capita.  The  distribution  of  banks  and 
capital  by  towns  and  counties  may  readily  be  seen  from  the  fol- 
lowing table. 


240 


Ohio  Arch,  and  Hist.  Society  Publications. 


DISTRIBUTION    OF    BANKS   AND    CAPITAL   IN    OHIO,    JANUARY,    1857. 


*"" 

** 

1 

Capital 

Stock. 

Town.* 

County. 

Population  in 

Number  of  Bt 

a 

T! 

2 

« 
'1 

6 
1 

Ashtabula                               . 

Ashtabula    

31  814 

1 

$100  000 

$3  143 

Athens     

21,364 

1 

100  000 

4  681 

Belmont       

36  398 

1 

100  000 

2  748 

29,958 

1 

120,000 

4  006 

Champaign 

22  698 

1 

26  000 

1  145 

Springfield     

Clark    

25,300 

2 

150,000 

5  929 

Salem 

Columbiana  ... 

32  836 

1 

100  000 

3  045 

Cleveland    

Cuyahoga  

78,033 

5 

570,000 

7.305 

Delaware    

23  902 

1 

94  500 

3  954 

Sandusky        

24,474 

2 

176,500 

7  212 

Franklin            

50  361 

3 

450  000 

8  935 

Lancaster    

Fairfield    

30,538 

1 

100,000 

3.275 

Fayette    

15  935 

1 

100  000 

6  275 

Xenia 

26  197 

1 

100  000 

3  517 

Hamilton      

216  410 

3 

321  872 

1  487 

Cadiz 

19  110 

1 

100  000 

5  233 

Logan 

Hocking    

17  057 

1 

100  000 

5  863 

Norwalk    

Huron    

29,616 

1 

125  000 

4.221 

Steubenville    

26  115 

f1 

100,000 

(.  7  65g 

Mt.   Pleasant    

27  735 

lj 

100,000 
100  000 

3  606 

Painesville       

Lake       

15,576 

1 

50  000 

3  210 

Ironton    
Elyria     

Lawrence  
Lorain         ......... 

23,249 
29  744 

1 
1 

65,350 
75  000 

2.811 
2  522 

Toledo 

25  831 

1 

100  000 

3  871 

Youngstown    

Mahoning    

25  894 

1 

50  000 

1  931 

Marion 

15  490 

1 

50  000 

3  228 

Troy    

29  959 

f1 

100,000 

I  Q  676 

Piqua    
Dayton     

52  230 

I   1 
2 

100,000 
157  000 

3  006 

44  416 

2 

200  000 

4  503 

23  469 

1 

100  000 

4  261 

Ravenna                  

fl 

103,000 

Franklin     Mills  

1-  Portage     

24,208 

>•  8.080 

Eaton 

Preble       

21  820 

, 
I  1 
1 

92,600 
100  000 

4  583 

Mansfield           

Richland     

31,158 

1 

100  000 

3  209 

Chillicothe 

Ross    

35  071 

3 

400  000 

11  406 

Portsmouth    

Scioto  

24,297 

1 

100,000 

4.116 

Tiffin     ... 

Seneca     

30  868 

1 

100  000 

3  240 

Canton        

r  i 

30,000 

Massillon 

>•  Stark    

42,978 

j  , 

j-  5.352 

Cuyahoga   Falls    

Summit     

27,344 

I  2 
1 

200,000 
100  000 

3  657 

Warren 

Trumbull       .   .  . 

30  656 

1 

75  000 

2  447 

Marietta       

Washington    

36,268 

1 

100  000 

2  757 

Wooster    . 

Wayne     

32  483 

1 

90  000 

2  771 

Total    for    41    counties 

1  408  860 

60 

$5  871  822 

$4  156 

Total     for     State     (88 
counties)     

2  339  511 

60 

5  871  822 

2  510 

*  For  location  see  map  p.  16. 

f  12th  Census  Bulletin  No.  41,  p.  2. 

t  Banker's  Mag.  11:616-17  (Feb.  1857). 

§  Ratio  of  capital  stock  to  population  in  1860. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    241 

Industrial  Progress  in  Ohio  1852  to  1857.  —  The  less  than 
6  millions  of  bank  capital  shown  in  the  foregoing  table  represent 
a  big  decline  from  the  nearly  8  millions  employed  in  Ohio  in 
1852.  During  the  intervening  years  private  banks  and  brokers 
had  flourished,  depreciated  foreign  paper  had  abounded,  and 
trade  and  exchange  had  been  subjected  to  much  uncertainty. 
Nevertheless  the  industries  of  the  state  had  been  progressing  in 
spite  of  the  decline  in  authorized  banking  facilities,  and  the 
fluctuations  of  exchange  rates. 

In  Ohio,  as  in  other  parts  of  the  country,  the  years  1850-2 
had  been  years  of  comparatively  low  prices.  Then  followed  a 
gradual  rise  in  prices  until  they  reached  a  high  level  in  1855. 
Thus  in  Cincinnati  from  1851  to  1855  the  price  of  wheat  rose' 
from  58  cents  a  bushel  to  $1.62,  corn  from  3OC  a  bushel  to  43C, 
flour  from  $2.95  a  barrel  to  $8.10,  whiskey  from  i6c  a  gallon  to 
34j/2C,  hogs  from  $4.55  a  hundred  to  $6.30,  pork  from  $12  a 
barrel  to  $16,  lard  from  7c  a  pound  to  io^4c,  sugar  from  5^c  a 
pound  to  7^c,  coffee  from  IDC  a  pound  to  I2^c,  and  tallow 
candles  from  IDC  a  pound  to  i5c.14  In  1856  all  these  prices 
show  a  decided  falling  off  while  in  1857  they  were  about  as  low 
as  in  1852. 

It  will  be  seen  then  that  the  increase  is  not  merely  in  price, 
when  it  is  stated  that  from  1852  to  1857  Ohio's  annual  export 
of  home  products  increased  from  $40,000,000  to  $70,000,000. 
This  represented  a  surplus  from  a  total  production  of  agri- 
cultural, mineral,  and  manufactured  products  amounting  to  more 
than  $261,000,000  leaving  over  $191,000,000  for  home  consump- 
tion.15 


14  Report  of  Ohio  Commissioners  of  Statistics,  1859,  p.  96. 

Industrial  Depressions  —  Hull,  pp.  145  and  146. 

See  Appendix,  p.  291. 

^Annual  Report  of  Commissioner  of  Statistics,  1857,  p.  540. 

Ohio  Exec.  Doc.,  1857,  Part  I,  No.  8,  p.  351. 

Products  of—  Production.  Exports. 

Mining   $9,483,500  $2,100,000 

Agriculture    132,700,000  48,300,000 

Manufacture     119,300,000  20,000,000 


Total    $261,483,500        $70,400,000 

16 


242  Ohio  Arch,  and  Hist.  Society  Publications. 

Failure  of  Ohio  Life  Insurance  and  Trust  Company.  — 

It  was  well  for  Ohio  at  this  time  that  her  business  prosperity 
rested  on  the  solid  basis  of  her  agricultural  and  mineral  wealth 
and  the  products  manufactured  therefrom,  rather  than  on  the 
speculative  foundation  of  the  stock  market.  Throughout  the 
country  the  rapid  industrial  development  of  the  period,  stimulated 
by  new  gold  discoveries,  expansion  of  paper  money,  excessive 
railroad  building,  etc.,  had  been  accompanied  by  undue  specula- 
tion, and  credit  was  strained  to  the  danger  point.  A  fall  of 
stocks  in  the  summer  of  1857  caused  great  embarrassment  to 
many  eastern  bankers  and  others  who  held  call  loans  for  which 
they  had  taken  stock  collateral.  And  on  Aug.  24,  the  crisis 
was  occasioned  by  the  failure  of  the  Ohio  Life  Insurance  and 
Trust  Co.,  wth  liabilities  running  into  millions.16 

This  institution  had  enjoyed  excellent  credit ;  its  home  busi- 
ness had  been  well  and  carefully  managed ;  and  its  directors  as 
well  as  the  public  thought  it  sound  and  prosperous.  Its  failure 
was  due  to  big  speculative  operations  by  the  cashier  of  its  New 
York  office.  The  deposit  balances  in  New  York  had  been  em- 
ployed in  common  by  the  Cincinnati  and  New  York  offices,  dis- 
counted upon  to  some  extent  in  the  West  and  the  remainder 
loaned  by  the  New  York  cashier  under  the  advice  of  a  sub-board 
of  eastern  trustees.17  Large  amounts  had  been  borrowed  on  call 
in  New  York  and  loaned  on  financial  securities  where  they  were 
not  immediately  available.18 

The  Panic  of  1857.  —  The  failure  of  the  Life  and  Trust 
Co.,  precipitated  a  panic  in  New  York.  All  the  banks  of  that 
city  suspended  specie  payment  but  one,  the  Chemical.  On  Sept. 
12  and  13  the  banks  of  Philadelphia,  Washington,  Baltimore,  and 


16  History  of  American  Currency  —  Sumner,  pp.  180  and  181. 

Financial  History  of  U.  S.  —  Dewey,  pp.  263-4. 

"Men  and  Measures  of  Half  a  Century  — McCulloch,  pp.  132-133. 

Bankers'  Magazine,  12:240   (September,  1857). 

18  Sumner,  p.  181. 

The  president  of  the  company  reported  among  the  causes  of  the 
failure:  "First.  In  his  (the  cashier's)  dealings  with,  and  large  advances 
to  the  Cleveland  and  Pittsburg  Railroad  Company,  to  aid  in  the  comple- 
tion of  said  road.  —  State  Bank  of  Ohio  —  Janney,  p.  171. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    243 

many  interior  towns  suspended.  Within  a  fortnight  stocks  fell 
40  or  50%  and  20,000  persons  were  thrown  out  of  work  in  New 
York  City.19  Important  railroads  reaching  into  the  West  became 
bankrupt,  but  the  crisis  was  mainly  financial.  150  banks  were 
said  to  have  failed  in  Pennsylvania,  Maryland,  Virginia,  and 
Rhode  Island.20  Suspension  became  general  except  in  the  Ohio 
Valley,  at  New  Orleans,  in  South  Carolina,  and  some  scattered 
exceptions  elsewhere.21 

Failure  of  Trust  Company  threatens  State  Bank  of  Ohio. 

— In  Ohio  practically  all  the  private  banks  were  compelled  to 
close  their  doors,  and  several  of  the  authorized  banks  failed. 
Many  of  the  Ohio  banks  had  kept  their  New  York  accounts  with 
the  Ohio  Life  Insurance  &  Trust  Co.,  and  its  failure  seriously 
crippled  them.  Almost  all  the  branches  of  the  State  Bank  had 
made  the  Trust  company  their  New  York  agent.  On  Feb.  2, 
1857,  the  branches  had  in  eastern  exchange  $1,130,398,  nearly 
all  with  the  Trust  company.  These  deposits  of  some  of  the 
branches  equaled  their  entire  capital.  Fortunately  two  influential 
members  of  the  board  of  control  were  in  New  York  at  the  time 
of  the  failure,  and  got  from  the  cashier  a  contract  setting 
aside  assets  enough  to  meet  the  demands  of  the  branches.  This 
saved  some  of  them  from  ruin.22 

Sept.  30,  1857,  the  board  of  control  adopted  a  resolution  as- 
serting that  the  branches  of  the  State  Bank  could  and  would  con- 
tinue, specie  payments,  and  agreed  to  a  plan  proposed  by  Mr. 
Kelley  to  dimmish  their  immediate  liabilities,  increase  their 
available  assets,  and  otherwise  act  in  concert  to  increase  their 
ability  to  maintain  specie  payments.23  And  throughout  this 
trying  period  the  branches  of  the  State  Bank  of  Ohio  continued 


19Sumner,  pp.  182  and  183. 

20  Gilbert  on  Banking,  Vol.  II,  p.  337. 

21  Banking  in  All  Nations,  1 :427. 

22  State  Bank  of  Ohio  —  Janney,  p.  170. 

23  Ibid.,  p.  167. 


244  Ohio  Arch,  and  Hist.  Society  Publications. 

to  redeem  their  notes;24  although  several  of  the  other  banks  in 
the  state  had  suspended.25 

The  State  Bank  establishes  a  Note  Redemption  Agency. 
— Among  other  recommendations  in  the  plan  adopted  by  the 
board  of  control  of  the  State  Bank  in  September,  1857  to  enable 
the  branches  to  continue  specie  payment  was  one  urging  the 
branches,  which  had  not  already  done  so,  to  cooperate  in  the  note 
redemption  agency  which  had  been  arranged  in  Cincinnati  by 
some  of  the  branches  in  May,  1857.  Twice  before  such  agencies 
had  been  successfully  established  for  a  time.26 

The  Ohio  Bank  Agency  of  1850.  —  In  1850  some  of  the 
branches  in  conjunction  with  other  banks  in  the  state  established 
an  agency  in  Cincinnati,  where  on  account  of  the  course  of  trade 
the  circulation  of  Ohio  banks  concentrated,  with  the  object  of 
checking  the  continual  drain  of  specie  from  their  vaults,  and  of 
keeping  their  notes  equal  to  coin  by  furnishing  eastern  exchange 
for  them,  at  all  times,  at  about  the  cost  of  transporting  coin. 
The  arrangement  provided  that  each  associated  bank  should  con- 
tribute in  proportion  to  its  circulation  (not  over  10%)  in  eastern 
exchange  to  be  deposited  with  the  agency  as  a  permanent  fund. 
The  eastern  funds  of  the  agency  were  to  be  deposited  in  eastern 
banks  subject  to  sight  draft  and  at  such  rate  of  interest  as  might 
be  agreed  upon.  The  agency  was  to  sell  exchange  at  rates  that 


24  "But  only  nominally,"  says  Mr.  McCulloch,  who  adds :     "Its  capital 
was   locked   up  in   the   Ohio   Life  and   Trust   Company,   and   it  was   so 
crippled  by  the  failure  of  that  bank  that  even  the  brokers  forebore  to 
return  its  notes."— Men  and  Measures  of  Half  a  Century  —  McCulloch, 
p.  133. 

25  Banking  in  All  Nations,  1 :442. 

Daily  Ohio  Statesman,  Oct.  30,  1857  and  Jan.  5,  1858. 

The  following  interesting  quotation  is  from  the  Crawford  County 
Forum.  Similar  accounts  can  be  found  in  the  Darke  County  Democrat, 
Cleveland  Plain  Dealer  and  other  Ohio  papers  of  the  time. 

Many  Ohio  banks  are  "resisting  specie  payments  by  the  interposition 
of  hired  mobs.  Within  the  last  month  citizens  have  been  driven  from 
the  banks  and  threatened  with  personal  violence  in  Mansfield,  Springfield, 
Marietta,  Xenia  and  Piqua,  for  daring  to  ask  specie  for  notes  on  these 
banks."  — See  Daily  Ohio  Statesman,  Nov.  10  and  19,  1857. 

28  Bankers'  Magazine,  12  :943. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    245 

would  prevent  the  shipment  of  specie  to  the  East,  receiving  notes 
of  specie  paying  banks.  These  notes  would  then  be  assorted  and 
reported  to  each  bank,  which  was  at  once  to  send  the  amount  to 
the  eastern  deposit  bank  of  the  agency  to  the  credit  of  the  agency, 
and  send  a  duplicate  check  to  the  agency.  The  bank's  notes 
would  then  be  subjected  to  the  order  of  the  bank. 

Notes  of  banks  not  members  of  the  association  when  re- 
ceived were  to  be  returned  for  redemption,  or  otherwise  dis- 
posed of  as  might  best  promote  the  objects  of  the  agency.  When 
a  member  should  refuse  to  settle  as  above,  or  a  non-member  re- 
fuse to  redeem  its  notes,  all  the  associated  banks  were  to  furnish 
the  agency  with  notes  of  the  refusing  bank  and  receive  therefor 
coin  or  exchange,  when  collected,  paying  the  agency  only  the  cost 
of  converting  and  transporting  the  same.27 

The  Opportunity  for  a  Redeeming  Agency.  —  The  board 
of  control  of  the  state  bank  after  considering  the  matter  at 
various  times  finally  decided  that  the  arrangement  was  prej- 
udicial to  the  interests  of  a  large  portion  of  the  branches,  and  it 
was  discontinued.28  It  was  felt  by  some  familiar  with  currency 
conditions  in  the  state,  however,  and  especially  during  the  great 
increase  of  depreciated  paper  after  1852  that  some  such  arrange- 
ment should  be  resumed,  that  the  Ohio  Valley  banks  might  keep 
their  notes  nearly  at  par  by  using  the  large  balances  which  they 
usually  had  in  New  York  for  their  redemption,  and  thus  extend 
their  circulation  by  the  facility  with  which  they  could  be  con- 
verted into  bankable  funds.  The  rate  of  exchange  on  New 
York  was  rarely  above  *^ %,  and  was  often  down  to  par.29 

The  Agencies  of  1854  and  1857.  — In  May  1854  the 
scheme  was  renewed  by  the  branches  of  the  State  Bank.  A  fund 
was  raised  and  placed  in  the  Mechanics'  and  Traders'  branch  at 
Cincinnati  for  the  purpose  of  returning  to  the  proper  bank  and 
converting  into  eastern  exchange  all  notes  that  were  depreciated 
below  those  of  the  State  Bank.  The  Mechanics'  and  Traders' 
branch  failed  in  November  of  that  year,  however,  and  again  the 

27  Cincinnati  Price  Current,  Dec.  12  and  25,  1849. 
Hunt's  Merchants'  Magazine,  22:125  and  126. 

28  State  Bank  of  Ohio  —  Janney,  p.  172. 

28  Banks  and  Banking  in  the  U.  S.  —  Baker,  p.  35. 


246  Ohio  Arch,  and  Hist.  Society  Publications. 

agency  was  closed.39  May  20,  1857  a  similar  arrangement  was 
made  with  Kenney,  Espy,  and  Company,  a  Cincinnati  banking 
house,  for  the  special  purpose  of  returning  the  notes  of  Kentucky, 
Indiana,  and  Virginia  banks.  The  agency  was  to  furnish  New 
York  exchange  at  y%%  premium  for  the  notes  of  the  banks 
named,  which  were  to  be  forwarded  to  it  by  the  branches  of  the 
State  Bank.  It  was  agreed  that  the  agency  should  not  pay  out 
the  notes  of  these  foreign  banks.  This  arrangement  lasted  until 
May  19,  1858,  when  a  final  attempt  was  made  and  a  more  ex- 
tensive agency  established.31 

Agitation  for  an  Ohio  Valley  Clearing  House.  —  Specula- 
tion had  so  controlled  the  rate  of  exchange  between  the  East  and 
the  West  that  the  feeling  had  become  pretty  widespread  that  the 
establishment  in  Cincinnati  of  some  sort  of  clearing  house  for 
the  banks  of  Ohio,  Indiana,  and  Kentucky  would  result  in  sub- 
stantial benefits  to  the  sound  banks  and  give  additional  protec- 
tion to  the  business  community.  Governor  Chase  recommended 
it  in  his  message  in  January  1858  ;32  the  Cincinnati  Chamber  of 
Commerce  indorsed  it  in  April;33  and  in  June  a  convention  of 
Ohio,  Indiana,  and  Kentucky  bankers  met  in  Cincinnati  and  pro- 
posed a  plan,  which  the  branches  of  the  State  Bank  of  Ohio 
under  took  to  put  into  operation.  This  movement  was  stopped, 
however,  by  the  discovery  of  legal  difficulty  in  the  way  of  locat- 
ing the  agency  of  a  foreign  bank  in  Ohio. 

The  Brokers'  Assorting  System.  —  It  was  believed,  how- 
ever, that  the  Indiana  banks  and  some  of  those  in  Kentucky 
would  cooperate  if  the  Ohio  banks  went  ahead  with  the  scheme. 
Cincinnati  was  then  the  monetary  center  of  the  West.  There 
was  an  annual  demand  there  for  exchange,  chiefly  on  eastern 
cities,  amounting  to  60  or  70  million  dollars.  Providing  these 
exchanges  had  brought  into  existence  an  extensive  broker's  as- 
sorting system,  which  furnished  exchange  to  the  merchant  often 


80  State  Bank  of  Ohio  —  Janney,  p.  172. 

81  State  Bank  of  Ohio  —  Janney,  p.  172. 
Cincinnati  Gazette,  June  5,  1857. 

32  Daily  Ohio  Statesman,  Jan.  5,  1858. 
83  Bankers'  Magazine,  June,  1858. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    247 

at  exorbitant  rates  though  sometimes  he  could  hardly  have  pro- 
cured it  without  the  broker's  help. 

Although  this  system  obtained  its  capital  chiefly  from  the 
deposits  of  merchants  and  manufacturers,  it  was  really  antago- 
nistic to  their  interests  since  it  constantly  sought  the  highest  pos- 
sible premium  of  exchange,  that  being  the  source  of  its  profits. 
These  high  charges  had  even  forced  some  of  the  larger  mer- 
CDntile  houses  into  competition  with  the  brokers  for  their  own 
special  supplies.34  Hence  the  merchants  as  well  as  the  bankers 
were  anxious  for  the  proposed  agency. 

The  Bank  of  the  Ohio  Valley.  —  The  plan  seemed  more 
likely  to  succeed  than  ever  before  not  only  from  the  general 
demand  but  also  on  account  of  the  better  means  of  communica- 
tion throughout  the  country.  In  1856  railroad  building  had  in- 
creased to  3,642  miles  mostly  in  the  western  states,35  and  Ohio 
in  1857  had  2,834  miles  of  railroad,  which  had  been  built  at  a 
cost  of  $95, 000,000. 36  Another  favorable  factor  was  the  low 
rate  of  exchange  which  promised  to  continue.  Accordingly  with 
good  prospects  of  success  a  bank  somewhat  on  the  plan  of  the 
Suffolk  Bank  of  Boston  was  organized  in  Cincinnati  under  the 
free  banking  law  of  1851,  and  a  contract  was  made  with  the 
State  Bank  of  Ohio  by  which  its  branches  were  to  deposit  with 
the  new  bank  an  amount  equal  to  4%  of  their  authorized  circula- 
tion, free  of  exchange  interest,  and  the  latter  was  to  sell  eastern 
exchange  at  a  rate  not  to  exceed  ^%,  premium. 

This  new  redemption  agency  was  known  as  the  Bank  of 
the  Ohio  Valley.  It  began  business  in  September  1858  with  a 
capital  stock  of  $51,000,  of  which  $34,000  was  paid  in.  It  soon 
after  increased  its  capital  stock  to  $500,000,  of  which  $300,000 
was  to  be  offered  in  Cincinnati  and  $150,000  in  New  York  and 
other  eastern  cities.  By  March  1859  it  already  had  a  special 
deposit  of  $306,000  from  associate  banks  in  Ohio,  had  sold 
$3,300,000  eastern  exchange,  and  had  returned  $2,700,000  bank 


34  Magazine  of  Western  History,  2:168. 
Bankers'  Magazine,  12 :943. 

35  History  of  American  Currency — Sumner,  p.  180. 

86  Report  of  Commissioner  of  Statistics,  1857,  p.  540. 

87  Banking  in  All  Nations,  1 :443. 


248  Ohio  Arch,  and  Hist.  Society  Publications. 

notes  for  redemption,  besides  having  current  deposits  of  $440,- 
ooo.  Its  managers  felt  confident  that  its  exchange  business  would 
pay  its  expenses,  and  that  its  discount  line  would  give  good 
dividends  to  its  stockholders.38 

The  Bank  of  the  Ohio  Valley  continued  to  act  as  redeeming 
agency  for  the  State  Bank  of  Ohio  until  Nov.  20,  1861  at  which 
time  foreign  notes,  except  those  of  the  Bank  of  the  State  of 
Indiana,  were  no  longer  current  in  Ohio.39  The  Bank  of  the 
Ohio  Valley  was  a  very  successful  institution.  Its  success  was 
due  to  good  management  and  strict  adherence  to  sound  financial 
principles.  It  never  charged  exorbitant  rates,  yet  at  the  close 
of  this  period  its  five  years  of  operation  showed  regular  dividends 
of  10%  a  year  and  an  extra  dividend  of  5%.  declared  Nov  2, 
1863.  Its  financial  statement  for  Nov.  3,  1863  showed  a  capital 
stock  of  $500,000,  undivided  profits  of  $150,000,  circulation 
$47,000,  and  deposits  $2,044,945,  a  total  of  means  available  for 
business  of  $2,746,563,  of  which  $1,708,556  were  interest  paying 
investments.40 


38  Bankers'  Magazine,  13:746  (March,  1859). 

38  State  Bank  of  Ohio  —  Janney,  p.  172. 

40  Cincinnati  Daily  Gazette,  Nov.  4,  1863. 

See  Appendix,  p.  295. 

A  clearing  house  association  was  formed  in  Cleveland,  Dec.  28,  1858, 
"to  effect  at  one  place,  and  in  the  most  economical  and  safe  manner,  the 
daily  exchange  between  the  several  associated  banks  and  bankers,  the 
maintenance  of  uniform  rates  for  eastern  exchange,  and  the  regulation 
of  what  descriptions  of  funds  shall  be  paid  and  received  in  the  settle- 
ment of  business."  The  subscribers  numbered  one  branch  bank,  one  inde- 
pendent bank,  one  free  bank,  and  six  private  banks.  —  Banks  &  Bankers 
of  Cleveland,  in  Magazine  of  Western  History,  2  :285. 


CHAPTER  XIV. 

CONCLUSION. 

Majority  of  Ohio  Banks  survive  the  Panic.  —  It  is  highly 
creditable  to  the  management  of  the  banks  of  Ohio  organized 
under  the  general  laws  of  1845  and  1851  that  they  passed  through 
the  crisis  of  1857,  made  extra  difficult  to  many  of  them  by  the  loss 
of  their  eastern  balances  through  the  failure  of  the1  Trust  Com- 
pany, without  a  general  suspension  of  specie  payments.  Such 
general  suspension  was  imminent  at  times,  and  some  of  the  banks 
were  actually  in  a  state  of  legal  and  others  in  a  condition  of 
virtual  suspension.  To  quote  from  Governor  Chase's  message  of 
Jan.  4,  1858,  Ohio's  "banking  institutions,  with  a  very  few 
temporary  exceptions,  have  performed  their  entire  duty  of 
specie  payments,  without  evasion  and  without  delay."1 

A  list  of  suspended,  depreciated,  and  discontinued  banks  in 
Ohio  published  in  October  1857  contains  but  seven  authorized 
banks,  five  independent,  and  two  free  banks.2  Of  these  at  least 
two  had  failed  long  before  the  panic  occurred,3  and  two  others 
had  been  among  those  reported  in  1854  as  not  in  active  business. 
In  fact  most  of  the  financial  trouble  in  Ohio  in  1857  had  orig- 
inated not  in  authorized  banks  of  issue,  but  in  the  failures  of 
private  bankers  and  of  the  Trust  Company.4  The  failure  of  the 
Ohio  Life  Insurance  and  Trust  Company  in  1857  removed  the 
last  representative  of  the  old  banks  organized  under  special 
charters,  with  no  security  for  their  circulation  except  their 
general  assets. 


1  Ohio  Exec.  Doc.,  1857,  Part  I,  p.  347. 

2  Daily  Ohio  Statesman,  Oct.  30,  1857. 

"Of  these  two,  the  Canal  Bank  of  Cleveland  had  failed  in  Novem- 
ber, 1854,  and  the  Seneca  County  Bank  had  failed  March  1,  1857.— 
Ohio  Laws,  57 :126  and  61 :152. 

*The  Ohio  Life  Ins.  &  Trust  Co.'s  power  to  issue  notes  had  termin- 
ated Jan.  1,  1843. 

(249) 


250  Ohio  Arch,  and  Hist.  Society  Publications. 

Many  Ohio  Banks  become  National  Banks  after  1863.  — 

Of  the  three  classes  of  banks  remaining  in  the  state  in  1858  all 
were  organized  under  general  laws.  Of  the  free  banks  organized 
under  the  law  of  1851,  some  are  still  in  existence,  as  Ohio  still 
has  a  modified  form  of  that  banking  law.  The  branches  of  the 
State  Bank  and  the  independent  banks,  however,  were  organized 
under  the  law  of  1845,  which  gave  them  existence  only  for  20 
years.  Consequently  when  the  Civil  War  broke  out  and  the 
National  Bank  Act  was  passed  many  of  them  took  advantage  of 
the  opportunity  and  became  National  banks.  Of  the  first  ten 
National  banks  organized  in  1863,  six  were  in  Ohio.5  By  Decem- 
ber 31  of  that  year  there  were  forty  fully  organized  national 
banks  in  the  state  with  a  capital  of  $5,448,200.  The  next  year 
the  number  in  Ohio  increased  to  82,  with  a  capital  of  $9,772,000 ; 
while  in  1865  there  were  134  with  a  capital  of  $2i,i46,ooo.6 

End  of  Period  of  Note-Issue  under  General  Ohio  Laws. 
— In  November  1861  there  were  still  in  operation  in  Ohio  seven 
independent  banks,  twelve  free  banks,  and  thirty-six  branches  of 
the  State  Bank.  By  August  1863  two  of  the  independent  and 
two  of  the  free  banks  had  disappeared,  leaving  but  fifty-one  in 
the  state  with  a  capital  of  $5,177,500  and  a  circulation  of  $6,915,- 
576.  The  notes  of  these  banks  had  to  compete  with  the  new 
National  bank  notes  and  the  greenbacks,  or  notes  of  the  federal 
government.  They  held  their  own,  however,  until  the  federal 
tax  of  10%,  upon  the  issues  of  state  banks  early  in  1865  forced 
the  retiring  of  the  circulation  of  all  state  banks. 

This  together  with  the  expiration  of  the  charter  of  the 
State  Bank  closed  another  period  in  Ohio's  banking  history, 
that  of  state  banks  organized  under  general  laws  and  issuing 


5  Two  in   Cleveland,   two  in  Dayton,  one  in   Fremont,   and  one   in 
Youngstown.  —  Bankers'  Magazine,  18:84    (July,  1863). 

6  Seventh  Annual  Report  Commissioner  of  Statistics  of  Ohio,  p.  631. 
Knox,  p.  685. 

At  the  beginning  of  1864  there  were  approximately  200  banks  in 
Ohio  with  over  $12,000,000  capital.  Half  of  these  were  private  banks  (27 
in  Hamilton  County)  with  a  capital  of  $2,019,336.  —  Report  of  Commis- 
sioner of  Statistics,  Feb.  5,  1864.  [The  commissioner  considered  that 
the  business  of  the  banks  was  conducted  with  great  prudence,  and  ob- 
served: "We  find  no  fictitious  banks  and  no  spurious  notes."] 


,  Banking  and  Currency  in  Ohio  Before  the  Civil  War.    251 

notes  secured  by  a  safety  fund  or  deposit  of  government  bonds. 
Henceforth  note-issue  ceased  to  be  a  function  of  banks  organized 
under  state  laws. 

Classes  of  Ohio  Banks  under  General  Laws.  —  The  banks 
organized  under  the  general  laws  of  1845  and  1851  were  at- 
tended by  a  high  degree  of  success,  and  furnished  a  currency  well 
adapted  to  the  business  wants  of  the  people.  Both  of  these  laws 
were  constructed  with  particular  reference  to  the  security  of  the 
bill  holder;  and  both  accomplished  their  purpose  in  this  regard. 
A  comparison  of  the  provisions  of  these  laws  as  to  the  three 
classes  of  banks,  which  they  authorized,  shows  that  some  features 
were  common  to  all  three  classes :  such  as  those  forbidding  any 
bank  directly  or  indirectly  pledging,  hypothecating,  or  exchang- 
ing any  of  its  circulating  notes  to  procure  money  to  be  paid  on 
its  capital  stock,  or  to  be  used  in  its  ordinary  banking  operations ; 
and  providing  criminal  punishment  for  any  officer  thereof  who 
might  embezzle  or  wilfully  misapply  any  of  the  bank's  moneys, 
funds,  or  credits. 

The  independent  and  free  banks  were  also  each  prohibited 
from  pledging,  hypothecating,  or  exchanging  any  of  their  cir- 
culating notes  for  the  purpose  of  purchasing  stocks  to  be  de- 
posited with  the  treasurer  or  auditor  of  state;  and  they  were 
alike  in  each  having  to  deposit,  as  security  for  the  ultimate 
redemption  of  their  notes,  state  or  United  States  stocks  equal  in 
amount  to  the  notes  they  wished  to  issue.  They  differed,  how- 
ever, in  that  the  independent  banks  had  to  pay  in  but  30%  of 
their  capital  before  they  were  allowed  to  begin  business,  while  the 
free  banks  were  required  to  pay  in  60%  of  their  capital  before 
receiving  a  certificate  to  do  business. 

No  special  provision  was  made  for  the  security  of  depositors 
or  purchasers  of  bills  of  exchange  in  any  one  of  the  three 
classes,  the  legislature  doubtless  supposing  that  voluntary  cred- 
itors could  take  care  of  themselves,  and  that  the  law  should  mainly 
look  to  the  protection  of  the  involuntary  creditors  of  a  bank, 
that  is,  the  note  holders.  All  were  required  to  furnish  quarterly 
reports  of  their  condition,  however,  and  all  were  subject  to  an- 


252  Ohio  Arch,  and  Hist.  Society  Publications. 

nual  examinations;  the  branches  of  the  State  Bank  by  the  board 
of  control,  and  the  other  two  classes  by  special  examiners  ap- 
pointed by  the  state  officials. 

Division  of  Banks  according  to  Security  for  Note  Issue. 
— As  to  the  security  of  note  holders,  the  three  classes  of  banks 
in  the  state  naturally  fall  into  two  groups :  those  whose  notes 
were  secured  by  a  deposit  of  state  or  federal  bonds,  namely,  the 
independent  and  the  free  banks ;  and  those  with  note  issue  secured 
by  the  safety  fund  plan,  that  is,  the  branches  of  the  State  Bank. 
Of  these  there  was  a  general  notion  in  the  early  5o's  that  the 
notes  of  the  stock  banks  were  more  secure  from  loss  than  those 
of  the  branches  of  the  State  Bank.  The  independent  banks  had 
to  pay  in  as  much  cash  capital  as  the  branch  banks,  and  had 
besides  to  deposit  with  the  state  treasurer  state  or  federal  stocks 
equal  in  amount,  at  not  less  than  their  par  value,  to  the  notes 
issued;  and  the  free  banks  had  to  pay  in,  to  make  up  their 
capital,  double  the  proportion  in  cash,  that  was  required  of  the 
branches,  and  in  addition  had  to  deposit  with  the  state  auditor 
state  or  federal  stocks  equal  in  amount  at  not  less  than  their  par 
value,  to  their  circulation.  And  if  the  stocks  deposited  by  either 
class  fell  below  their  par  value,  the  officers  holding  them  were 
required  to  retain  the  interest  accruing  thereon,  sufficient  to  keep 
the  depreciated  stocks  equal  to  par. 

Objection  to  the  Safety  Fund  Security.  —  On  the  other 
hand  the  failure  of  any  one  branch  of  the  State  Bank  would 
weaken  all,  and  if  all  should  go  by  the  board  there  would  be  no 
ultimate  security  for  the  note  holders  to  rely  on.  Besides,  the 
safety  fund  plan  was  open  to  the  objection  that  it  created  a 
fund  sufficient  to  give  credit  to  a  bank  which  might  be  created 
purely  for  speculative  purposes,  and  being  owned  by  persons  in 
other  states  after  their  notes  were  fairly  in  circulation  the 
capital  might  be  withdrawn,  the  bank  declared  insolvent,  and  the 
community  defrauded.  In  the  State  Bank  of  Ohio  this  was 
taken  care  of  by  the  board  of  bank  commissioners  who  carefully 
considered  the  application  of  each  association  before  granting  a 
certificate. 


: 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    253 

Another  objection  to  a  safety  fund  sometimes  offered  is 
that,  although  the  fund  might  be  nominally  large  enough  to 
cover  the  amount  of  notes  of  an  insolvent  bank,  it  is  usually  made 
up  of  bonds  and  mortgages,  which  are  not  immediately  con- 
vertible and  the  delay  in  redeeming  the  circulation  causes  an 
immediate  depreciation,  and  occasions  a  loss  to  such  unfortunate 
holders  as  cannot  wait  for  the  ultimate  redemption.  This,  it 
might  be  said,  however,  applies  with  equal  force  to  the  plan  for 
securing  the  notes  of  the  Ohio  stock  banks.  While,  as  a  matter 
of  fact  it  does  not  apply  to  the  State  Bank  at  all,  as  will  appear 
n  further  consideration. 

Comparison  of  State  Bank  of  Ohio  with  that  of  Indiana. 
—The  State  Bank  of  Ohio  is  sometimes  referred  to  as  patterned 
after  the  State  Bank  of  Indiana.  This  is  not  strictly  true.  The 
Indiana  Bank  was  partly  owned  and  officered  by  the  state.  The 
Ohio  Bank  was  owned  and  operated  entirely  by  private  indi- 
viduals. In  both  actual  banking  business  was  carried  on  entirely 
by  the  branches,  the  central  board  merely  supervising,  examin- 
ing, and  controlling.  In  the  Indiana  Bank,  however,  each 
branch  was  liable  for  the  debts  of  every  other  branch.  They 
were  independent  of  each  other  as  to  assets,  but  were  united  as 
to  liabilities.  In  the  Ohio  plan,  however,  the  branches  were 
responsible  for  each  other  only  as  to  note  issue,  and  here  they 
were  protected  by  the  safety  fund.  This  brings  us  to  the  re- 
semblance of  the  Ohio  plan  to  that  of  the  New  York  Safety 
Fund  Banks. 

Comparison  of  State  Bank  of  Ohio  with  New  York  Safety 
Fund  System.  —  The  State  Bank  of  Ohio,  while  resembling 
the  New  York  Safety  Fund  system  in  some  respects,  differed 
from  it  in  certain  important  particulars.  In  the  New  York  plan 
each  bank  contributed  to  the  safety  fund  in  proportion  to  its 
capital.  Now  as  the  circulation  of  the  smaller  banks  was  usually 
larger  in  proportion  to  their  capital,  this  meant  that  the  larger 
banks  were  unduly  burdened  to  guarantee  the  notes  of  the  weak 
ones.  In  the  Ohio  plan,  this  objection  was  obviated  as  each 
branch  contributed  to  the  safety  fund  in  proportion  to  its 
circulation.  Again  in  the  original  New  York  system  the  safety 


254  Ohio  Arch,  and  Hist.  Society  Publications. 

fund  was  a  guaranty  for  both  notes  and  deposits  of  an  insolvent 
bank:  in  the  State  Bank  of  Ohio  the  safety  fund  was  used  only 
as  against  the  notes  of  the  failing  bank.  This  brings  us  again  to 
the  above  mentioned  argument  as  to  the  holders  of  small  amounts 
of  the  circulation  of  a  failing  bank  losing  while  awaiting  the  con- 
version of  the  safety  fund  assets  before  any  ultimate  redemption 
of  the  notes. 

This  was  one  of  the  defects  in  the  New  York  safety  fund 
system :  depreciation  of  the  assets  composing  the  safety  fund,  and 
delay  in  ultimate  redemption.  In  the  State  Bank  of  Ohio  the 
safety  fund  was  not,  as  in  the  New  York  plan,  held  as  a  fund 
for  the  protection  of  the  noteholder,  but  for  the  benefit  of  the 
branches  themselves.  The  safety  fund,  so  to  speak,  by  which 
the  noteholder  was  protected  consisted  of  the  entire  capital, 
assets,  or  means,  of  all  the  branches ;  and  it  was  the  duty  of  the 
manager,  in  case  of  the  insolvency  of  any  one  branch,  to  make 
immediate  provision  for  the  payment  of  the  notes  of  such,  in 
coin,  by  requisition  upon  all  the  solvent  branches.7 

Thus  when  the  Commercial  Branch  failed  in  1855,  the  $i,- 
633,000  specie,  and  the  $1,446,000  eastern  deposits,  (to  say 
nothing  of  the  rest  of  the  $15,960,000  resources)  of  the  branches 
were  at  once  liable  for  the  redemption  of  the  notes  of  the  in- 
solvent branch.  The  safety  fund  was  held  solely  as  a  fund 
from  which  the  branches  themselves  were  reimbursed  for  con- 
tributions in  aid  of  a  branch  that  had  failed. 

But  this  was  not  the  only  means  of  sustaining  the  credit  of 
a  failed  branch's  circulation.  Each  branch  was  required  to  re- 
ceive the  issues  of  such  failing  bank,  in  payment  of  all  debts,  at 
their  par  value.  This  prevented  their  depreciation,  as  they  were 
current  in  any  part  of  the  state  for  this  purpose  alone.  It  was 
through  the  operation  of  these  two  influences  that  the  principle 
of  immediate  availability,  as  distinguished  from  that  of  ultimate 


7  The  penalty  upon  the  branch  for  failure  to  redeem  its  notes  con- 
sisted in  a  summary  winding  up  by  the  board  of  control. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    255 

security,  was  attained,  whereby  this  system  was  distinguished 
from  all  others.8 

Comparison  of  State  Bank  with  Stock  Banks,  —  In  this 
respect  the  State  Bank  of  Ohio  was  superior  to  the  stock  banks 
of  the  state,  the  latter  depending  upon  the  principle  of  ultimate 
security.  The  notes  of  the  insolvent  stock  banks  in  Ohio  were  all 
redeemed,  sooner  or  later,  as  the  sale  of  the  deposit  stocks  usually 
brought  enough  to  redeem  the  notes  of  the  failed  bank,  and 
sometimes  more.  Thus  when  the  Canal  Bank  of  Cleveland  failed 
the  sale  of  its  deposited  stocks  brought  in  $10,000  more  than 
the  amount  of  its  outstanding  notes,  this  $10,000  then  going  to 
the  depositors.9  But  this  sale  occurred  in  February  1855,  three 
months  after  the  failure.  Thus  some  of  the  note  holders  may 
have  lost  money  by  the  delay.  Then,  too,  any  unusual  strain 
might  have  depreciated  the  value  of  the  deposited  stocks.  Ohio 
6%  stocks  went  down  to  95  in  New  York  in  November  1854  as 
a  result  of  the  failure  of  several  Ohio  stock  banks  that  year.10 

Another  point  of  superiority  of  the  State  Bank  was  that 
under  the  guidance  of  the  board  of  control  the  branches  worked 
in  harmony,  while  among  the  stock  banks  there  was  no  concert  of 
action,  no  unity  of  interest.  As  to  general  security  of  depositors 
there  was  not  so  much  difference,  the  advantage  being,  if  any- 


8  During  the  period  covered  by  the  State  Bank  of  Ohio,  six  of  its 
branches  got  into  difficulty.  As  early  as  Dec.  22,  1845,  the  executive  com- 
mittee of  the  board  of  control,  learning  that  the  Toledo  and  the  Summit 
County  Branches  had  illegal  arrangements  with  certain  private  bankers 
in  New  York,  placed  them  under  close  surveillance  until  Nov.  22,  1850, 
when  the  stock  of  the  Summit  County  Branch  was  transferred  to  other 
parties.  In  1854  the  Akron  Branch  was  found  to  be  unsound  and  the 
Mechanics'  and  Traders'  Branch  at  Cincinnati  was  reported  to  have 
suspended ;  both  were  wound  up  by  the  board  of  control.  On  May  23, 
1855,  the  Commercial  Branch  of  Toledo  was  taken  under  the  care  of  the 
executive  committee.  Funds  were  provided  to  redeem  its  notes  and  the 
branch  was  closed.  The  notes  of  all  these,  however,  as  those  of  the 
Licking  County  Branch,  which  was  closed  in  May,  1852,  continued  to  pass 
at  par  and  were  redeemed  as  promptly  as  those  of  the  most  thoroughly 
solvent  bank.  —  The  State  Bank  of  Ohio  —  J.  J.  Janney,  p.  169. 

'Bankers'  Magazine,  8:659. 

10 Daily  Enquirer  (Cincinnati),  Nov.  24,  1854. 


256  Ohio  Arch,  and  Hist.  Society  Publications. 

thing  however,  on  the  side  of  the  State  Bank,  especially  if  we 
consider  the  percentage  of  failures  throughout  the  period.  As  to 
elasticity,  the  data  is  not  very  satisfactory  but  what  there  is 
favors  the  State  Bank.11 

In  conclusion,  then,  it  may  be  said  that  the  State  Bank  of 
Ohio  gave  the  very  highest  satisfaction,  and  as  a  system  adapted 
to  the  needs  of  the  people  at  the  time,  was  probably  one  of  the 
best  in  the  country. 


11  The  ratio  of  circulation  to  capital  for  the  branches  of  the  State 
Bank  constantly  ranged  considerably  higher  than  that  of  the  stock  banks. 
—  See  diagram,  Appendix,  p.  298. 


APPENDIX 

TO 

BANKING  AND  CURRENCY  IN  OHIO 
BEFORE  THE  CIVIL  WAR. 

(257) 


17 


QUOTATIONS  OF  OHIO  BANK  NOTES 
AT  PHILADELPHIA  1814  TO  1837  AND  AT  NEW  YORK,  1835  TO  1838, 

also 

QUOTATIONS  OF  SPANISH  DOLLARS 
AT  PHILADELPHIA  1814  TO  1831  AND  AT  NEW  YORK  1832  TO  1838.1 


Date. 

Ohio  Banks. 

Spanish 
Dollars.3 

Old  — 
Chartered. 

Others  —  New  and 
Unchartered. 

1814,  Oct.    31. 
Nov     7. 
Nov.  14. 
Dec.     5., 

1815,  Jan.      2. 
Apr.     3.. 
June     5., 
July      3.. 
Sept.    4., 
Sept.  18. 
Dec 

1816,  Jan.      1. 
Apr. 
May   13. 
July 

Sept.    9. 
Oct.    21. 
'Nov. 
Dec.     2. 

1817,  Jan. 
Apr. 
July 
Oct. 

Dec. 

1818,  Jan. 
Apr. 

July 

Oct      5. 
Dec. 

1819,  Missing. 


1 

7  to 

9  p  3 

7 

4  to  7£  d 

6  to 

7A-  n 

4 

4  to  5  d 

10  to 

12  o 

5 

4  to  5  d 

12  p 

2 

6  to  7  d     

3 

3£  to  5  d  .  .    .  . 

5 

3£  to  4  d 

111  tc 

>  12  p 

3 

3d 

15  p 

4 

5J  d         ... 

15  p 

8 

171  o 

4 

8  to  10  d     ... 

16  p 

1 

8  to  10  d     ... 

16  p 

1 

15  to 

16  p 

S 

16  p 

1 

18  to 

18£  p 

q 

10  p 

>1 

-1 

7  to 

8  p 

?i 

10  to  12  d  

7  p 

6 

12  to  15  d  

5  o 

7 

6  d  

10  to  12  d  

7 

5  to  10  d  

10  to  25  d  

1  P 

fi 

4  to  6  d 

New  8  d   Unchartered 

no  sales       

1  P 

1.. 
5 

4  J  to  7  d  
4J-  to  5  d  

New  8  d.  Unchartered 
no  sales  
No  purchases    

1  to 

1 

H  d. 

6 

4Mo  7  d 

No  purchases 

3  n 

fi 

6  to  7  d  

No  purchases 

5 

4£  to  10  d  

No  purchases 

5  n 

7 

10  to  12JJ-  d  

No  purchases 

4   n 

ig.. 

1  Compiled  from  Elliot's  Funding  System,  pp.  1106  to  1152. 

2  The  Spanish  dollars  were  not  all  of  the  same  weight.  Those  in 
circulation  in  1829  were  said  by  the  director  of  the  mint  to  be  worth, 
on  an  average,  100  cents,  3  mills,  (p.  1104). 

3  Quotations  for  Gold  and  Silver,  1814 ;  Span.  Gold  and  Silver,  1815 ; 
and  Spanish  Silver,  1816. 

(259) 


260 


Ohio  Arch,  and  Hist.  Society  Publications. 


QUOTATION  OF  BANK  NOTES  AND  SPANISH  DOLLARS  AT 
PHILADELPHIA  —  Continued. 


Date. 

Ohio  Bank  Notes. 

Spanish  Dollars. 

1820   Jan      3 

15  to  25  d  . 

A    p 

Apr     3 

14  to  25  d  

par 

July    3  

15  to  25  d 

par. 

Oct.     2  

12^  to  25  d 

par. 

Dec.    4  

12£  to  25  d 

par. 

1821,  Jan.     1  

5  to  12£  d 

par. 

Apr.    2  

5  to  12£  d 

par. 

July    2  

5  to  10  d 

par. 

Oct.     1  

5  to  8  d 

par. 

Dec.    3  

5  to  8  d 

par. 

1822,  Jan.     7  

5  to  8  d 

1  p. 

4  Apr.    1  

8  d 

2  P. 

July     l..\.... 

6  d 

par. 

Oct.     7  

6  d 

£  P- 

Dec.    2  

6  d 

*  P- 

1823,  Jan.     6  

6  d 

rr. 

5  Apr.    7  

6  d 

P. 

July    7  

6  d 

i  p. 

Oct.     6  

5  to  6  d 

par. 

Dec.     1  ........ 

5  to  6  d 

par. 

1824   Jan.     5  

5  to  6  d 

par. 

Apr     5  

5  to  6  d 

i  P- 

July    5.. 

5  to  6  d 

£  P- 

Oct     4  

5  to  6  d 

i  p. 

Dec.    6  

5  to  6  d 

i  p. 

1825,  Jan.     1  

5  to  6  d       . 

Apr.    4  

5  to  6  d  

May  25,  2  p. 

July    4  

5  to  8  d  

1  p. 

Oct      1        

5  to  8  d 

1*  P- 

Dec     3  

5  to  8  d 

par. 

1826   Jan      7     .  . 

5  to  8  d 

par. 

Apr     1  

5  d 

i  P- 

July     1   . 

5  d 

1  p. 

Oct      7.. 

4  to  6  d          .           ... 

\  P. 

Dec   30  

4  to  6  d         .  .           

f  P. 

1827   Jan      6         ... 

4  d  6  

par. 

Apr     7  

4  d    

1  p. 

July      7    . 

4  to  6  d  

par  to  1  p. 

Oct      6 

4  to  6  d 

par 

Dec     1 

4  to  6  d 

A  p. 

*  Banks  of  Zanesville,  New  Lisbon,  West  Union,  50d.  Miami  Ex- 
porting Co.,  Cincinnati,  80d.  Lebanon,  75d.  Urbana,  80d.  Canton,  20d. 
Cleveland,  75d.  Dayton,  25d;  all  without  variation  to  20th  May;  after- 
wards no  sale.  Muskingum,  25d.  throughout  the  year. 

B  Miami  Exporting  Co.,  Lebanon,  Urbana,  Zanesville  Canal  Co.,  Cleve- 
land, New  Lisbon,  West  Union  and  Canton,  no  sales.  Muskingum,  25d. 
throughout  year. 

6  Dayton  Bank,  lOd,  in  Jan.  and  6d.  rest  of  year.  St.  Clairsville, 
6d.  June-December. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    261 


QUOTATIONS  OF  BANK  NOTES  AND  SPANISH  DOLLARS  AT 
PHILADELPHIA  —  Continued. 


DC 

ite. 

Ohio  Bank  Notes. 

Spanish  Dollars. 

1828,  Jan 

5 

4  d        

J  p. 

Apr 

5  

4  d        

£     D. 

July 

5  

3£  d    

A  p. 

Oct. 

4  

3*  d    . 

\  P- 

Dec 

6 

4  d 

i    p 

1829,  Jan. 

3  

3^  d.  . 

par  to  \  p. 

Apr. 

4  

3d    

par  to  \  p. 

July 

2 

2^  to  3  d 

par  to  ^  o 

Oct 

3 

2|  to  3  d 

par  to  ^  o 

Dec 

5 

2£  to  3  d 

par  to  i  D 

1830   Jan 

2 

2|  to  3  d 

par  to  i  p 

»7Apr 

3 

2A  d 

par  to  i  p 

July 

3 

2}  d 

par  to  i  p 

Oct 

2 

2*  d 

par  to  i  p 

Dec 

3  .    .     .. 

2£  d                            

par  to  1  p. 

1831,  Jan 

1.. 

H  d 

par. 

8  Apr 

1  

1£  d 

par. 

July 

1  

1|-  d                   .           .... 

par. 

Oct 

1 

par  to  \  p. 

Dec 

7  

1£  to  3  d     

Dec  2,  \  to  1  p 

1832,  Jan 

4     ..      . 

1£  to  3  d 

1  to  \\  p 

9  Apr 

11  

U  to  3  d        .     . 

Apr.  4,  1^  to  2  p. 

July 

4        

1£  to  3  d 

11  n 

Oct 

10     .. 

li  to  3  d 

i-y  p. 

Orf    3    9   n 

Dec. 

1  

H  to  3  d 

ti  tn  91  « 

1833    Jan 

3  

H  to  3  d     . 

Jan    9     1  i  tn   9   n 

Apr 

2 

li  to  3  d.. 

Anr    3    94-  fn   9i  n 

July 

3  

li  to  3  d..     .. 

1  (fp|    1    n 

Oct. 

1  

11  to  3  d..     .. 

Ort    ^    91  tn   ^  n 

Dec 

17  

H  to  3  d  

Der     4     9    n 

1834,  Jan. 

4  

2  to  3  d  

Jan  2   1  to  2  p 

Apr. 

5  

2  to  4  d  

July 

5  

2  to  4  d  

July  2   £  to  1  p 

Oct. 

4  

2*  to  4  d  

October  1    If  to  2J  p 

Dec. 

6  

23  to  4  d  

Dec   3    1  to  2  p 

7  Scioto,  5d.     Farmers'  Bank  of  Canton,  4  to  6d. 

8  Bank  of  Cincinnati,  Hamilton,  Mansfield,  West  Union,  Xenia,  New 
Salem,  Cleveland,  F.  &  M.  of  Chillicothe,  F.  &  M.  of  Cincinnati,  German 
Bank  of  Wooster,  Granville,  Lebanon  and  Miami,  Miami  Exp.  Co.,  Mus- 
kingum,   New   Philadelphia,  Owl   Creek,   Steubenville,   Ohio   State  Bank, 
Cincinnati,  Zanesville  C.  &  M.  Co., — Broken. 

9  Bank  of  Scioto,  Dec.  7   (1831),  5  to  8d.     Jan.  4  and  April  11,  8d. 
July  4,  Oct.  10,  December  1,  lOd. 


262 


Ohio  Arch,  and  Hist.  Society  Publications. 


QUOTATIONS  OF  BANK  NOTES  AND  SPANISH  DOLLARS  AT 
PHILADELPHIA  —  Concluded. 


Date. 

Ohio  Bank  Notes. 

Spanish  Dollars. 

1835   Jan    17 

2£  to  3  d     

Jan.  7,  1  to  2  p. 

Apr     2 

2£  to  3  d  

April  1,  1  to  2  p. 

July     4 

2J  to  3  d  

July  1,  2J  to  3J  p. 

Oct      3 

2£  to  3  d  

Oct.  7,  3  to  4  p. 

Dec     5.. 

2j  to  3  d  

Dec.  2,  4  to  5  p. 

1836    Jan      2 

2  to  2|  d 

2£  to  3  p 

May  14 

2J  d  

May  5,  3  to  4  p. 

July  16 

2J  to  3  d 

Jiilv  9     3  tn  4.  n 

Oct    15 

3  to  4  d 

Dec     3 

3  to  4  d 

^  to  fi  r» 

1837    Jan    31 

3  to  4  d         

Apr     1 

3  to  4  d      

9  to  4  p 

Tulv     1 

4  to  5  d  

13  to  15  p 

J0ct      7  

4J  to  5  d  

Oct   4    6  to  7  p 

Dec     9 

4   d 

Dec  2  7  to  8J  p 

1838,  Jan.      3  

5  to  6  p 

Jan     10  

5  to  6  p 

Jan.    20  

5  to  6  p 

Jan.    27  

5  to  6  p 

Ohio  Bank  Notes 

Ohio  Bank  Notes 

Date. 

at  New  York. 

Date. 

at  New  York. 

1  •' 
1835,  Jan.    7... 

1J  to  4  d. 

July    1... 

Apr.   1... 

1*  to  4  d. 

Sept.  2... 

4  to  8  d. 

July    1... 

1  to  3  d. 

Nov.  1... 

6d. 

Oct.    7... 

1  to  3  d. 

Dec.    2... 

6  d. 

Dec.    2... 

1  to  3  d. 

1838,  Jan.    3.  .  . 

6  d. 

1836,  Jan.    2... 

13-  to  3  d. 

10  Jan.    7... 

6  d. 

Apr.   6... 

If  to  3  d. 

Jan.  10... 

6  d. 

July    2... 

li-  to  4  d. 

Jan.  13... 

6  d. 

Oct.    1... 

1$  to  5  d. 

Jan.  17... 

6d. 

Dec.    3... 

H  to  5  d. 

Jan.  20... 

6  d. 

1837,  Jan.    4... 

4  to  5  d. 

Jan.  24... 

6  d. 

Apr.    1... 

4  to  5  d. 

Jan   27... 

6  d. 

10  Bank  of  West  Union,  lOd. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    263 

ABLE  SHOWING  THE  HIGHEST  AND  LOWEST  PRICES  OF 
OHIO  BANK  NOTES  AND  SPANISH  DOLLARS  AT  PHILA- 
DELPHIA, IN  EACH  YEAR,  FROM  OCTOBER,  1814,  TO 
DECEMBER,  1823.11 

Date.  Ohio   Notes.  Spanish  Dollars. 

1814  iy2  to    5  d.  

1815 7      to    3@10  d.  8      to  10  p. 

1816 5      to  12  d.  !Sy2  to    7  p. 

1817  15   to  4  d.  5  p.  to  par  @  iy2  p. 

1818 4y2  to  I2y2  d.  1   to  6  p. 

1819  to  15@30  d.  3   to  6  @  tf  p. 

1820  12^  to  25  d.        y2  p.  to  par. 

1821  5   to  12y2  d.      par. 

1822  5   to  8@6  d.     2  p.  to  par. 

1823  6   to  5  d.       par  to  y2  p. 

SAME  FROM    1834  TO  APRIL,    1838. 

1834  2   to  4  d.  par  to  3  p. 

1835  2y2  to  3d.  

1836  2   to  3d.  1   to  4  p. 

1837  3   to  6  d.  1   to  13  p. 

1838 4   to  7  d.  4   to  7  p. 


SAME   AT    NEW    YORK  FROM    1835  TO    1838. 

1835  1  to  3  d.  1   to  5  p. 

1836  iy2  to  5  d.  2y2  to  6  p. 

1837  4  to  10@6  d.  2   to  15  p. 

1838  6  to  10  d.  1   to  7  p. 


11  Compiled  from  Elliot's  Funding  System,  pp.  1158,  1159. 


264  Ohio  Arch,  and  Hist.  Society  Publications. 


>  Bro...  31-37  E.  G»y  St..  Corn*r  Pearl,  Colambat,  O. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    265 


RECEIPTS  FROM  SALES  OF  PUBLIC  LANDS  OF  THE  UNITED 

STATES. 

Prior  to  June  30,  1796  — $1,201,725.68. 


Year. 

Amount. 

Year, 

Amount. 

1796  

$4,836  13 

1819  

3,274,422  78 

1797  

83,540  60 

1820  

1,635,871  61 

1798  

11,963  11 

1821  

1,212,966  46 

1799  

1822  

1,803,581  54 

1800  

443  75 

1823  

916,523  10 

1801  

167,72606 

1824  

984,418  15 

1802  

188,62892 

1825  

1,216,090  56 

1803  

165,675  69 

1826  

1,393.785  09 

1804  

487,526  79 

1827  

1,495,845  26 

1805  

540,193  80 

1828  

1,018,308  75 

1806  

765,245  73 

1829  

1,517,175  13 

1807  

466,16327 

1830  

2,329,356  14 

1808  

647,93906 

1831  

3,210.815  48 

1809  

442,25233 

1832  

2,623,381  03 

1810  
1811  

696,54882 
1,040,237  53 

1833  
1834  

3,967,682  55 
4,857,600  69 

1812  

710,427  78 

1885  ....... 

14,757,600  75 

1813  

835,655  14 

1836  

24,877,179  86 

1814  

1,135,971  09 

1837  

6,776,236  52 

1815  

1,287,959  28 

1838  

3,730,945  66 

1816  

,  1,717,985  03 

1839  

7,361,576  40 

1817  

1,991,226  06 

1840  

3,411,818  63 

1818  

2,606,564  77 

1841  

1,365,627  42 

-The  Public  Domain  —  Donaldson,  p.  17. 


266 


Ohio  Arch,  and  Hist.  Society  Publications. 


THE  OHIO  LIFE  INSURANCE  AND  TRUST  COMPANY. 
DISTRIBUTION  OF  REAL  ESTATE  LOANS  IN  OHIO  IN  JANUARY,  1836. 

AMOUNT  LOANED  ON  BONDS  AND  MORTGAGES  IN  EACH   COUNTY: 


County. 

Amount. 

County. 

Amount. 

Adams    

Lorain   

20,870 

Allen  

$13,972 

Logan   

32,030 

Athens  

Lawrence    

Ashtabula    

10,200 

Miami  

35,610 

Brown   

2,112 

Madison     

13,450 

Butler   

22,450 

Marion   

43,485 

Belmont  

14,795 

Morgan    

9,500 

Cuyahoga   

139,790 

Monroe    

12,940 

Coshocton    

800 

Montgomery    .  . 

36,290 

Carroll    

20,722 

Muskingum  

16,309 

Columbiana  

20,725 

Medina  

3,500 

Clinton   

7,150 

Mercer   

12,055 

Clermont 

23  750 

Meigs 

Clark    

63  680 

Pike    

Champaign    

27,875 

Pickaway  

37,450 

Crawford  

16,100 

Paulding   

2,800 

Delaware   

15,200 

Putnam    

300 

Darke   

26,590 

Preble  

28,000 

Fairfield  

14,290 

Portage    

36,640 

Franklin  

88,975 

Perry    

650 

Fayette  

2,000 

Ross    

16,000 

Geauga  

500 

Richland   

27,325 

Gallia    

10,715 

Sandusky  

6,230 

Greene  

21,749 

Shelby    

16,810 

Guernsey    

4.350 

Scioto    

3,050 

Hocking  .  .  .'  

1,200 

Seneca    

45,322 

Huron  

17,350 

Stark  

40,625 

Hamilton   

499,827 

Trumbull   

700 

Hardin    

4,060 

Tuscarawas  

23,690 

Harrison    

37,810 

Union   

10,600 

Highland  

Van  Wert   

400 

Holmes    

14,700 

Wavne    

21,900 

Hancock  

1,000 

Williams    

5,500 

Henry  

1,200 

Wood    

1,000 

Jackson    

Warren    

55,800 

Jefferson    

22,582 

Washington    .  .  . 

11,400 

A  f\    TT^x 

Licking  

3,600 

Total  

$1,858,099 

To  secure  repayment  of  these  loans,  real  estate  was  pledged  of  the 
estimated  value  of  $4,338,117.  —  Ohio  Monitor.  (Columbus),  Jan.  18,  1836. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    267 


DIGEST  OF  THE  ACT  TO  INCORPORATE  THE  STATE  BANK 

OF  OHIO  AND  OTHER  BANKING  COMPANIES. 

(Passed  Feb.  24,  1845.)* 

1.  Occupies  30  pages. 

2.  Five  persons  or  more  may  form  company. 

3.  Aggregate  capital  stock  of  all  not  to  exceed  $6,150,000. 

4.  State  divided  into  12  districts  —  names  counties  in  each. 

5 .  Number    in    counties    limited :     Hamilton    County    4,    Cuyahoga    6, 

Franklin  3,  Ross  2,  Muskingum  2,  Jefferson  2,  Summit  3, 
Lucas  2,  Miami  2,  Montgomery  2,  each  other  1. 

6.  Capital  stock  may  be  increased  after  end  of  two  years. 

7.  Provides  for  Board  of  Bank  Commissioners  for  1  year,  after  which 

Auditor,  Treasurer  and  Secretary  of  State  shall  be  the  com- 
missioners. 

8.  Persons  forming  banking  company  must  make  certificate  specifying 

name  of  company,  amount  of  stock,  number  of  shares  held  by 
each  member  of  company,  time  of  organization. 

9.  Provides  for  the  branches  of  state  bank  and  also  for  independent 

banks. 

10.  Capital  stock  of  an  independent  bank  must  be  at  least  $50,000  and 

of  branch  of  state  bank  $100,000,  neither  to  exceed  $500,000  — 
shares  $100. 

11.  At  least  30%  of  capital  stock  to  be  paid  in  gold  or  silver  coin,  or 

equivalent. 

IN    RELATION    TO    STATE   BANK. 

12.  When  seven  companies  have  formed,  shall  appoint  members  of  the 

Board  of  Control  to  meet  in  Columbus. 

13.  Board  of  Control  to  furnish  notes   for  circulation,  prescribe  rules 

for  settlement  of  balances  between  branches,  visit  and  examine 
branches.  Their  compensation  and  expense  of  printing  notes 
to  be  paid  by  branches,  the  latter  in  ratio  of  notes  of  circula- 
tion received  by  each. 

14.  Notes  issued  by  any  branch,  payable  there  in  gold  and  silver  coin. 

15.  Proportion  of  notes  in  circulation  to  capital  stock: 

On  1st  $100,000  capital  not  over  twice  that  amount  notes. 
On  2nd  $100,000  capital  not  over  1^2  that  amount  notes. 
On  3rd  $100,000  capital  not  over  1^  that  amount  notes. 
On  4th  $100,000  capital  not  over  once  that  amount  notes. 
On  any  amount  over  $400,000  capital  not  over^  that  amount 
notes. 


*  Laws  of  Ohio,  Vol.  43,  p.  24. 


268  Ohio  Arch,  and  Hist.  Society  Publications. 

ACT   OF  FEBRUARY  24,    1845  —  Continued. 

16.  Each  branch  to  pay  over  to  Board  of  Control  10%  on  amount  of 

notes  received  for  circulation  —  the  "Safety  Fund"  to  be  in- 
vested in  stock  of  state,  or  U.  S.,  or  first  mortgage  real  estate 
bonds  of  twice  value  of  amount  secured,  branches  to  receive 
interest  on  same. 

17.  Stockholders  collectively  of  any  branch  shall  not  be  liable  as  debtors 

or  securities  to  such  branch  to  over  £  the  capital  stock  paid 
in  and  remaining.  Nor  directors  collectively  to  have  over  J4 
capital  stock  actually  paid  in,  standing  in  their  names. 

18.  Branch  refusing  to  redeem  notes  shall  be  insolvent  and  Board  of 

Control  shall  appoint  a  receiver. 

19.  Each  solvent  bank  shall  contribute  for  redemption  of  notes  of  fail- 

ing branch,  to  be  repaid  from  sale  of  stocks  in  safety  fund. 

IN    RELATION    TO    INDEPENDENT    BANKS. 

20.  These   to   deposit   with    Treasurer   of    State,    State   or   U.    S.   stock 

equal  in  amount  to  capital  stock  —  Treasurer  to  issue  them 
notes  for  circulation  not  exceeding  amount  of  stock  deposited; 
expenses  of  same  to  be  paid  out  of  Treasury  to  give  new 
notes  for  mutilated  ones  and  burn  latter.  Banks  to  receive 
interest  on  stock  deposited  except  which  such  notes  go  below 
par  for  four  consecutive  weeks,  or  bank  fails  to  redeem  its 
notes. 

21.  If  independent  bank  fails  to  redeem  notes,  Treasurer  to  sell  stock 

deposited  and  from  proceeds  pay,  in  ratablle  proportion,  the 
circulating  notes  such  bank  has  at  Treasury. 

22.  No  dividends  to  be  made  on  shares  while  any  debts  are  unpaid. 

23.  Stockholders  collectively  of  any  independent  bank  shall  not  be  liable 

to  the  bank  to  an  amount  over  3/5  capital  paid  in.  Directors 
not  over  amount  specified  by  by-laws  of  company. 

24.  Duty   of   Auditor,    Treasurer   and    Secretary   of    State    annually   to 

appoint  person  in  vicinity  of  each  independent  bank  to  ex- 
amine same. 

GENERAL    PROVISIONS. 

25.  No  shareholder  of  any  bank  to  receive  dividends  or  profits  while 

he  is  in  debt  to  the  county,  but  his  dividend  or  profits  to  be 
retained  and  applied  to  payment  of  such  debt. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    269 

ACT   OF   FEBRUARY  24,   1845  —  Continued. 

26.  No  banking  company  to  receive  as  security  a  lien  on  any  part  of 

its  capital  stock.  Same  security  to  be  demanded  of  stock- 
holders as  of  other  persons.  Bank  to  make  no  purchase  of  its 
own  or  the  capital  stock  of  any  other  incorporated  company 
unless  necessary  to  prevent  loss  on  debt  previously  contracted 
in  good  faith.  No  stock  so  purchased  to  be  held  over  six 
months  if  it  can  be  sold  for  what  stock  cost,  at  par. 

27.  Stockholders  entitled  to  one  vote  for  each  share — not  less  than  five 

nor  more  than  nine  directors. 

28.  Incorporations  all  with  succession  till  May  1,  1866,  and1  thereafter 

till  affairs  closed. 

29.  Notes  issued  may  be  $1,  $2,  $3,  $5,  $10,  $20,  $50  and  $100  only.    Of 

these  issued  by  any  bank  not  over  10%  shall  be  $1  notes ;  5%  $2 ; 
10%  $3;  20%  all  denominations  under  $5;  50%  all  denomina- 
tions under  $10. 

30.  Nothing  to  be  circulated  as  money  except  notes  above   described. 

Each  independent  company  to  redeem  notes  of  all  other  inde- 
pendent companies  at  par;  same  for  State  bank  branches. 

31.  Each  bank  keep  on  hand  in  gold  or  silver  or  equivalent  30%  of 

amount  outstanding  circulation. 

32.  Branch  banks  not  to  be  indebted  over  two-thirds  of  its  actual  capital 

stock.  Independent  banks  not  over  whole  amount  capital  stock, 
except  on  account: 

1.  Its  notes  of  circulation. 

2.  Moneys  deposited  with  or  collected  by  such  company. 

3.  Bills  exchange  drawn  against  deposits  to  its  credit. 

4.  Liabilities  to  its  stockholders  on  account  money  paid  in  or 

capital  stock  and  dividends  thereon. 

33.  Loans  to  stockholders  not  to  exceed  six  months.    Dividends  always 

to  be  on  net  profits. 

34.  Semi-annual  statements  to  Auditor  must  show: 

1 .  Capital  stock  paid  in  and  remaining. 

2.  Circulation.    Amount  of  each  denomination  of  note. 

3.  Greatest  amount  in  circulation  at  any  time  since  previous 

statement. 

4.  Amount  of  balances  and  debts  due  State  bank,  other  banks 

of  Ohio,  banks  of  other  states. 

5.  Deposits. 

6.  Amount  of  debts  and  liabilities  —  greatest  amount  at  any 

time  since  previous  statement. 

7.  Amount  of  dividends  declared. 


270  Ohio  Arch,  and  Hist.  Society  Publications. 

ACT   OF   FEBRUARY  24,    1845  —  Continued. 

8.  Gold  and  silver  coin  and  bullion  belonging  to  bank. 

9.  Amount  subject  to  be  drawn  in  gold  and  silver  on  deposit 

in  New  York,  Philadelphia,  Boston  and  Baltimore. 

10.  Circulating  notes  on  hand  of  State  bank,  other  Ohio  banks, 

banks  of  other  states. 

11.  Balances  due  from  each  of  ten  excluding  nine. 

12.  Loans    and    discounts.     Specify    amount    considered    bad, 

doubtful,  in  suit  or  judgment. 

13.  Real    and    personal    property    held     for    convenience    of 

company. 

14.  Real  and  personal  property  received  on  debts  due. 

15.  Undivided  profits. 

16.  Liabilities  to  company  by  directors. 

17.  Liabilities  to  company  by  stockholders. 

35.  Dividend  to  be  declared  on  first  Monday  of   May  and  November. 

Then  banking  company  to  set  off  to  the  state  6%  on  profits  in 
lieu   of  all  taxes. 

36.  Six  per  cent,  interest  on  loans  and  discounts  by  Rowlett's  tables. 

Excess  cause  forfeiture  of  debt  on  demand. 

37.  Total  liabilities  of  any  person  or  company  to  a  bank  limited. 

38.  Banks  prohibited  to  circulate  notes  at  par,  notes  of  banks  of  other 

states  of  less  denomination  than  $5,  of  banks  not  redeeming  in 
gold  and  silver. 

39.  Certain  old  banks  authorized  to  recommence  banking  if  they  comply 

with  this  act. 

40.  Any  branch  of  State  Bank  may  close  business  with  consent  of  Board 

of  Control. 

41.  Repeals  Act  of  March  7,   1842,  and  February  21,   1843.    Notes  of 

less  than  $5  are  forbidden  other  banks. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    271 


DIGEST    OF    THE   ACT    TO    AUTHORIZE    FREE   BANKING   IN 

OHIO. 

(Passed  March  21,  1851.)* 

1.  Any  number  of  persons  not  less  than  three  may  engage  in  business 

of  banking  under  this  act. 

2.  Certificate   to   specify    name    and   place    of   business    of    company, 

amount  of  capital  stock  and  number  of  shares,  name  and  resi- 
dence and  number  of  shares  held  by  each  member,  time  com- 
pany formed,  to  be  deposited  with  Secretary  of  State. 

3.  Capital   stock    (exclusive   of   securities   deposited  with  Auditor   for 

redemption  of  circulating  notes)  shall  be  at  least  $25,000  and 
not  over  $500,000. 

4.  Sixty  per   cent,    of    stock    to   be   paid   in   before    company  begins 

business. 

5.  Auditor  of  State  to  furnish  engraved  notes  to  bank  for  circulation 

upon  deposit  of  Ohio  or  U.  S.  stock  equal  in  amount,  but 
Auditor  not  to  take  stock  above  par  or  current  market  value 
nor  producing  less  than  5%  interest.  Auditor  shall  not  furnish 
notes  more  than  three  times  amount  of  actual  capital.  Bank 
to  pay  expenses  of  issue. 

6.  Banks  have  corporate  power  till  1872  and  thereafter  till  act  repealed. 

7 .  Capital  stock  in  shares  $50 ;  deemed  personal  property  and  assign- 

able on  books  of  company.  Each  bank  shall  have  lien  on  stock 
of  its  debtors  and  no  stock  of  debtor  transferred  without 
consent  of  majority  of  directors. 

8.  No  lien  to  be  taken  on  capital  stock  as  security  for  loan,  but  same 

security  in  kind  and  amount  required  of  stockholders  as  of 
others.  No  company  to  hold  its  own  capital  stock  or  that  of 
other  corporations  unless  purchase  necessary  to  prevent  loss 
on  debt  previously  contracted  in  good  faith;  and  then  not  held 
longed  than  six  months  if  it  can  be  sold  at  what  it  cost  at  par. 

9.  In  elections  one  share  entitled  owner  to  one  vote.     Proxies  allowed, 

but  no  officer,  clerk,  teller,  or  bookkeeper  may  act  as  proxy. 

10.  Not  less  than  three  nor  more  than  five  directors.    Directors  must, 

during  whole  term,  be  resident  of  Ohio.  Three-quarters  of  the 
directors  must  have  resided  in  the  State  two  years  previous  to 
election.  Directors  collectively  must  own  1/10  of  the  capital 
stock  and  hold  office  one  year. 

11.  Notes  may  be  $1,  $2,  $3,  $5,  $10,  $20,  $50  and  $100  only.     Proportion 

fixed  same  as  law  of  1845.  After  1860  Legislature  may  prohibit 
notes  less  than  5. 


*  Laws  of  Ohio,  Vol.  49,  pp.  41-56. 


272  Ohio  Arch,  and  Hist.  Society  Publications. 

DIGEST  OF  FREE  BANKING  LAW  —  Continued. 

12.  All  banks  under  this  law  to  receive  notes  of  each  other  at  par. 

13.  Thirty  per  cent,  of  amount  circulated  to  be  kept  on  hand  in  coin 

or  equivalent;  one-half  of  this  in  coin.  Actual  deposits  in 
sound  banks  of  New  York,  Boston,  Philadelphia  or  Baltimore 
deemed  equivalent  to  coin. 

14.  Limits  to  debts  of  company  not  over  amount  of  actual  capital  stock, 

except  circulation,  deposits,  drafts  on  deposits  to  credit  of  the 
company,  liabilities  to  stockholders  for  money  paid  on  capital 
stock  and  dividends  thereon. 

15.  Notes  not  to  be  exchanged  for  stock,  nor  capital  stock  for  certifi- 

cates of  stock  to  be  deposited  with  Auditor  for  redemption 
of  notes. 

16.  Capital  stock  not  to  be  withdrawn  in  form  of  dividends  or  loans  to 

stockholders  for  more  than  six  months.  No  dividend  greater 
than  amount  of  net  profits. 

17.  Directors  on  first  Monday  in  May  and  November  to  declare  a  divi- 

dend and  file  statement  with  Auditor  of  State  (as  in  law  of 
1845). 

18.  Interest  rate  6%  by  Rowlett's  tables;  usury  forfeits  debt. 

19.  Liabilities    to    any     other     company     not    to    exceed     one-third    its 

circulation. 

20.  Uncurrent  notes  not  to  be  paid  out. 

21.  Violation  law  forfeits  privileges. 

22.  Officers  guilty  imprisonment  in  Pen.  at  hard  labor  5  to  20  years. 

23.  Mutilated  notes  to  be  exchanged  and  burnt. 

24.  If  bank  fail  redeem  notes  —  holder  may  have  protested  and  notify 

Auditor  after  which  unlawful  for  bank  to  do  any  business 
except  receive  and  safely  keep  moneys  belonging  to  it,  and 
deliver  special  deposits  —  Auditor  to  sell  stock  deposited  and 
redeem  notes  outstanding  —  Individual  liability  of  stockhold- 
ers in  proportion  to  stock  when  bank  fails  to  redeem. 

25.  Where  bank  owned  by  less  than   6   stockholders   they  individually 

liable  for  all  debts  and  liabilities  of  bank. 

26.  No  dividends  to  be  made  when  capital  stock  is  diminished. 

27.  Stockholders  collectively  shall  not  be  liable  to  bank  for  over  two* 

fifths  capital  stock. 

28.  Damages  for  refusal  to  redeem  notes  15%  per  annum  from  time  of 

refusal  till  resumption. 

29.  List  of  shareholders  &  am't  stock  to  be  filed  with  county  recorder 

Jan.  &  July  each  year  —  also  with  Aud.  State  —  another  at  bank. 

30.  Company   not   to   begin   business    till    deposit    with   Auditor   equals 

60%  capital. 


OHIO  BANK  STATISTICS.     1846-1863. 


PRINCIPAL  RESOURCES  AND  LIABILITIES  OF  BANKS 

BY  CLASSES. 

(DIAGRAMS  AND  DETAILS.) 

(273) 


18 


274  Ohio  Arch,  and  Hist.  Society  Publications. 


1 


: 


I 


i 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    275 


276 


Ohio  Arch,  and  Hist.  Society  Publications. 


May  1,   1846.12 


OHIO  BANK   STATISTICS.     1846-1863. 

Independent  Branches  of 


RESOURCES: 

Banks. 

State  Bank. 

Old  Banks. 

Number   of  banks  

7 

16 

8 

Notes  and   bills  discounted  

$968,896 

$2,423,779 

$4,639,219 

Specie    on   hand  

159,669 

618,049 

705,552 

Notes   of   other    banks  

146,474 

374,577 

466,203 

Due    from    banks  

56,484 

107,366 

435,676 

Eastern    deposits    

96,723 

357,280 

462,023 

Bonds  deposited   with  State  

565  118 

207,588 

Other  resources    

134,259 

16,694 

937,323 

Total    resources     

.     $2,127,623 

$4,105,333 

$7,645,996 

LIABILITIES  : 

Circulation     

$499,100 

$1,822,435 

$2,463,760 

Capital   stock  paid  in  

328,720 

1,173,450 

2,565,376 

Due   to    banks  

79,488 

89,884 

807,544 

Individual    deposits    

644,521 

946,563 

972,852 

Contingent   fund    

12,992 

26,234 

256,687 

494  170 

State  taxes  paid   for  6  mo  

1,654 

3,773 

7,374 

Other   liabilities    

66,978 

42,994 

572,403 

Total    liabilities     

.  ..     $2,127,623 

$4,105,333 

$7,645,996 

May  5,    1847.13 

Independent 

Branches  of 

RESOURCES: 

Banks. 

State  Bank. 

Old  Banks. 

Number    of  banks  

9 

22 

8 

Loans     

...     $1,187,713 

$4,812,772 

$4,936,175 

Specie    

201,035 

1,080,467 

745,047 

Bank    notes    

123,226 

540,302 

418,033 

Bank    balances    

88,985 

170,507 

260,376 

Eastern    deposits    

251,488 

487,345 

513,332 

State   bonds 

783  920 

Safety  fund  deposited  with  board  of  control... 

387,349 

Other    resources    

164,310 

58,862 

935,951 

Total    resources    

,  .  ,     $2,800,679 

$7,537,597 

$7,908,926 

LIABILITIES:     (Fractions    omitted.) 

Capital     

$440,300 

$2,070,700 

$2,560,700 

Circulation    

707,700 

3,678,900 

2,894,400 

Bank   balances    

145,300 

116,400 

790,100 

Deposits    

754,600 

1,274,900 

1,327,300 

729  900 

76  000 

State  tax  6  months  

1,900 

7,700 

8,000 

Contingent   fund    

23,700 

30,900 

214,300 

Other  liabilities    

73,000 

280,600 

120,800 

Total    liabilities    

...     $2,800,679 

$7,537,500 

$7,908,900 

"Banker's  Magazine,   Vol.  I,   p.  72. 
"Bankers'  Magazine,  Vol.  II,  p.  129. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    277 
OHIO  BANK  STATISTICS.    1846-1863  —  Continued. 

Independent  Branches  of 


RESOURCES:    (Aug.   1848.)1* 

Banks. 

State  Bank. 

Old  Banks. 

Number    of    banks  

11 

37 

7 

Bills    discounted    

$1,616,258 

$7,007,743 

$3,476,186 

Specie     

279,951 

1,994,937 

457,449 

Bank  n  otes   

193,507 

659,309 

415,526 

Bank    balances    

157,607 

442,913 

188,639 

Eastern    deposits    

304,625 

709,911 

535,441 

1,063,894 

653,063 

Real   estate    

20,097 

88,656 

160,654 

Total   resources    

$3,720,077 

$11,680,098 

$5,740,278 

LIABILITIES  : 

Capital    stock    

$613,015 

$3,499,814 

$2,  311,  226 

Circulation     

900,202 

5,633,322 

1,397,842 

Due   to    banks  

102,  2S3 

259,849 

287,074 

Deposits    

961,  118 

1,864,953 

1,373,357 

Safety    fund 

967  920 

69  757 

Surplus    fund    

65,167 

95,252 

242,988 

Discounts     

52,389 

168,906 

12,200 

Total   liabilities    

$3,720,077 

$11,680,098 

$5,740,278 

August  1849.  15 

Independent 

Branches  o] 

F 

RESOURCES: 

Banks. 

State  Bank. 

Old  Banks. 

Number   of   banks  

11 

40 

5 

Notes  and  bills   discounted  , 

$1,883,991 

$9,168,025 

$3,391,827 

Specie    , 

300,940 

2,496,980 

412,000 

Notes  of  other  banks  , 

236,025 

930,870 

644,172 

Bank   balances    , 

198,860 

420,545 

180,280 

Eastern    deposits    , 

261,856 

942,246 

303,100 

Cash   items    

35,272 

48,646 

69,606 

1,154,456 

821,044 

Real   estate    

50,610 

131,888 

125,356 

Miscellaneous     

104,726 

156,434 

280,067 

Total   resources    

$4,226,736 

$15,116,678 

$5,406,410 

LIABILITIES. 

Capital    paid    in  , 

$670,650 

$4,347,311 

$2,011,226 

Circulation      

1,036,156 

7,624,306 

1,203,217 

1,074,817 

68,302 

Bank   balances    .  .  .  ,  

158,601 

312,574 

820,116 

Deposits     

1,054,070 

2,228,241 

1,087,324 

Surplus    fund    

115,230 

183,344 

232,302 

Time   drafts    

23,650 

147,862 

10,840 

Profits    

44,240 

195,660 

14,604 

Dividends    unpaid     

8,610 

5,972 

22,229 

Miscellaneous     

40,712 

3,106 

4,552 

Total    liabilities    

$4,226,736 

$15,116,678 

$5,406,410 

"Ibid.,  Vol.  Ill,   p.  220. 

15  Bank.  Mag.,  Vol.  IV,  p.  354. 


278 


Ohio  Arch,  and  Hist.  Society  Publications. 


OHIO  BANK  STATISTICS.    1846-1863  —  Continued. 

Independent  Branches  of 


RESOURCES:18     (May  1850.) 

Banks.        State  Bank.  Old  Banks. 

Number  of  banks  

11 

41 

6 

Loans     

$2,139,588      $10 

,546,088 

$3,643,626 

Specie   on   hand  

311,295          2 

,116,732 

317,442 

Notes  of  other  banks  

225,890   • 

619,842 

411,052 

Bank    balances    

194,573 

521,312" 

146,391 

Eastern   deposits    

281,052 

836,027 

262,635 

Cash   items   

1,172 

34,961 

8,094 

State  bonds    

1,227,460 

880,568     . 

Real  estate   

65,412 

204,119 

153,433 

Miscellaneous     

61,588 

152,561 

317,354 

Total   resources    

$4,508,030      $15 

,912,210 

$5,260,027 

LIABILITIES: 

Capital  paid  in  

$711,860        $4 

,601,256 

$2,011,226 

Circulation    

1,078,002          7 

,829,052 

1,277,408 

1,155  570 

49  500 

Bank    balances    

104,943 

408,282 

572,403 

Individual    deposits    

1,138,617          2 

,361,998 

950,976 

Surplus  fund   

92,033 

289,086 

288,746 

Bills    payable    

118,998 

163,958 

88,488 

Discounts,    interest,    etc  

8,940 

3,784 

45,313 

State  tax  6  months  

3,276 

21,340 

1,400 

Dividends    unpaid    

50,398 

149,915 

21,432 

Miscellaneous     

45,393 

34,038 

2,636 

May     1851." 

Independent 

Branches  of 

Old 

Free 

RESOURCES  : 

Banks. 

State  Bank. 

Banks. 

Banks. 

Number   of   banks  

12 

41 

5 

Loans    and    discounts  

....     $2,710,724 

$11,994,120        : 

14,449,522 

Specie    on   hand  

321,558 

2,051,531 

425,736 

Bank  notes   

304,800 

696,252 

255,043 

Bank   balances    

212,810 

551,075 

204,074 

Eastern    deposits    

325,700 

1,147,043 

336,926 

State  bonds  

....       1,460,514 

915,696     .  . 

Cash   items    

1,486 

14,125 

21,000 

Real  estate   

97,728 

197,317 

148,752 

Miscellaneous     

75,678 

184,956 

203,863 

Total   resources    

....     $5,510,400 

$17,752,115        i 

^6,044,916 

LIABILITIES: 

Capital  paid  in  

$864,580 

$4,802,620        j 

£1,961,226 

Circulation    

....       1,391,457 

8,660,444 

1,636,874 

Safety  fund  stock  

....      1,215,612 

62,194     ... 

Bank  balances  

222,092 

396,318 

1,063,984 

Deposits    

....      1,516,170 

3,133,541 

955,975 

Surplus    fund    

39,141 

282,330 

299,107 

Time  drafts   

181,488 

168,256 

33,580 

Discounts,    etc  

22,793 

11,070 

55,500 

Dividends   unpaid    

51,204 

175,960 

2,164 

Miscellaneous    , 

5,862 

59,382 

36,506 

Total    liabilities    

$5,510,400 

$17,752,115        $6,044,916 

16  Bank.  Mag.,  Vol.  V,  p.  142. 
"Bank.  Mag.,  Vol.  VI,  p.  236. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    279 
OHIO  BANK  STATISTICS.     1846-1863  —  Continued. 


Independent 

Branches  of 

Old 

Free 

RESOURCES:     (Nov.  1852).  18 

Banks. 

State  Bank. 

Banks. 

Banks. 

Number    of  banks  

11 

40 

5 

12 

Loans    and    discounts  

.     $2,202,500 

$10,346,814 

$3,169,038 

$1,068,898 

Specie    

2fi9,478 

1,854,316 

384,060 

123,465 

Bank    notes    

304,210 

817,110 

770,711 

180,528 

Due    from    banks  

120,404 

636,495 

121,391 

166,034 

Eastern    deposits    

375,253 

2,035,765 

660,460 

215,938 

Checks,    cash    items  

22,054 

67,817     . 

6,252 

State    bonds    

.       1,195,930 

903,524     . 

703,984 

Real  estate,   etc  

105,115 

171,688 

136,390 

19,376 

Miscellaneous    

197,220 

325,084 

316,010 

12,920 

Total   resources   

.     $4,792,164 

$17,158,614 

$5,558,061 

$2,497,400 

LIABILITIES: 

Capital     

$749,180 

$4,456,675 

$1,547,526 

$361,730 

Circulation    

.       1,144,542 

8,120,828 

1,488,470 

619,370 

Safety  fund  stock  

.       1,148,410 

50,038     . 

444,490 

Bank   balances    

164,815 

354,961 

913,438 

90,896 

Deposits     

.       1,302,027 

3,543,650 

1,213,690 

912,676 

Surplus  fund  

55,412 

297,096 

323,770 

8,467 

Bills  payable   

85,971 

151,418 

12,046 

22,205 

Discounts    

39,396 

280 

32,836 

14,473 

Dividends  unpaid    

29,271 

140,928 

3,676 

23,092 

Other    liabilities    

73  140 

42  740 

22  608 

Total    liabilities    

$4,792,164 

$17,158,614 

$5,558,061 

$2,497,400 

August    1853.19 

Banks. 

State  Bank. 

Banks. 

Banks. 

RESOURCES: 

Independent 

Branches  of 

Old 

Free 

Number   of  banks  

11 

39 

5 

13 

Loans     

.     $2,276,342 

$10,135,691 

$1,737,890 

$1,236,018 

Specie    

249,792: 

1,682,872 

339,913 

171,625 

Bank  notes   

221,137 

769,356 

109,786 

202,771 

Due   from    banks  

153,148 

690,248 

122,067 

398,426 

Eastern  deposits  

319,975 

2,096,326 

713,452 

383,098 

Cash   items    

36,378 

75,717    , 

44,888 

State   bonds    

.       1,088,143 

823,127     . 

922,790 

Real  estate   

12X),528 

143,545 

93,343 

26,454 

Miscellaneous    

251,320 

282,540 

225,844 

11,543 

Total    resources    

.     $4,716,765 

$16,699,424 

$3,342,296 

$3,397,613 

LIABILITIES: 

Capital     

$719,330 

$4,141,175 

$936,300 

$695,440 

Circulation    

.      1,023,704 

7,642,276 

1,474,339 

849,602 

Safety  fund    

.      1,165,783 

49,387     . 

268,820 

Bank   balances    

182,  32t> 

438,864 

104,053 

148,164 

Deposits    

.      1,340,062 

3,720,765 

510,630 

1,333,213 

Contingent   fund    

66,510 

337,443 

287,352 

17,028 

Time   drafts    

122,090 

96,903 

8,452 

43,600 

Discounts     

659,926 

210,256 

9,070 

41,083 

Dividends    unpaid     

911 

4,523 

1,964 

663 

Miscellaneous    

30,218 

67,833 

10,135 

Total  liabilities  

.     $4,716,765 

$16,699,424 

$3,342,296 

$3,397,613 

"Bank.  Mag.,  Vol.  VII,  p.  508. 

"Bank.  Mag.,  Vol.  8,  p.  406. 

280  Ohio  Arch,  and  Hist.  Society  Publications. 

OHIO  BANK  STATISTICS.    1846-1863  —  Continued. 


November     1855.*> 

Independent 

Branches  of 

Old 

Free 

RESOURCES: 

Banks. 

State  Bank. 

Banks. 

Banks. 

Number    of   banks  

11 

37 

1 

13 

Loans     

..     $1,701,044 

$10,085,352 

$1,785,453 

$1,293,191 

Specie    

160,078 

1,633,976 

26,471 

140,431 

Notes    of   other    banks  

216,165 

534,603 

291,854 

172,847 

Due  from  other  banks  

82,374 

649,199 

143,617 

80,446 

Eastern    deposits    

290,514 

1,446,057     . 

225,543 

Checks  and  other  cash  items  

16,578 

38,645 

8,354 

8,451 

Bonds  of  U.   S.  and  State  

892,135 

798,910     . 

808,412 

Real  estate  and  personal  property  

36,293 

276,747 

23,002 

48,176 

Other    resources    

101,017 

488,131 

363,990 

62,519 

..     $3,496,197 

$15,960,619 

$2,642,742 

$2,840,017 

LIABILITIES: 

Capital  stock   

$537,500 

$4,094,500 

$223,000 

$837,250 

Circulation    

874,167 

7,520,481 

3,355 

756,692 

Safety  fund  stock  

728,187 

55,575     . 

231,000 

Due  to  banks  and  bankers  

111,401 

216,376 

770,701 

59,746 

Deposits    

..       1,012,505 

2,958,934 

1,601,884 

878,271 

Undivided    profits    

82,744 

730,040     . 

8,902 

Bills  payable  ,   time  drafts  

14,292 

86,943 

720 

16,554 

Dividends  unpaid   

7,043 

115,936     . 

24,928 

Other  liabilities   

128,358 

181,836 

43,082 

26,674 

Total    liabilities     

..     $3,496,197 

$15,960,619 

$2,642,742 

$2,840,017 

Independent 

Branches  of 

Old 

Free 

RESOURCES:     (Feb.   1856).  a 

Banks. 

State  Bank. 

Banks. 

Banks. 

Number   of   banks  

11 

41 

1 

13 

Loans  

..    $1,667,177 

$10,190,805 

$1,721,008 

$1,343,009 

Specie    

207,247 

1,740,563 

12,328 

136,673 

Bank    notes    

227,969 

745,747 

512,695 

146,549 

Eastern    deposits     '.  

294,679 

1,499,416     . 

271,132 

Due    from    banks  

95,018 

765,335 

66,201 

125,398 

Cash   items    

20,350 

60,260 

15,655 

8,293 

Bonds  of  U    S    and  Ohio 

883,535 

State  stocks  deposited  with  Auditor.  . 

787,248 

Safety    fund                                       •  •  • 

805  970 

Real  estate,   etc  

14,468 

277,050 

23,002 

36,188 

Otker    resources    

55,905 

492,436 

538,466 

108,241 

Total    resources    

..     $3,466,347 

$16,579,581 

$2,889,355 

$2,962,732 

LIABILITIES: 

Capital  stock    

$475,000 

$4,049,500 

$75,000 

$853,250 

Circulation  

829,576 

7,480,006 

3,355 

767,652 

Safety    fund    

700,407 

233,000 

Safety  fund  at  credit  B.   of  C  

60  264     . 

Due   to   banks  

81,654 

271,946 

1,298,610 

59,832 

Deposits    

..       1,119,342 

3,496,077 

1,493,983 

985,716 

Contingent  fund    

108,225 

731,136     . 

7,010 

Time   drafts   

63,921 

720 

5,000 

Discount,    interest,    etc  

46,588 

204,435     . 

49,400 

Dividends    unpaid    

173 

4,163     . 

1,871 

Other  liabilities   

105,381 

173,133 

17,687 

2 

»  Ohio—  Annual  Report  of  State 

Auditor  for  1855. 

»  Bank.  Mag.,  Vol.  10,  p.  977. 

Banking  and  Currency  in  Ohio  Before  the  Civil  War.    281 
OHIO  BANK  STATISTICS.     1846-1863  —  Continued. 

Independent        Free       Branches  of 


RESOURCES: 

Banks.            Banks.      State  Bank. 

8                     10                     36 

Loans     

$1,925,565        $1,430,248      $10,170,936 

Specie     

195,180             154,653          1,659,142 

Bills  of  other  banks  

260,450             199,754             665,240 

Due  from  banks  

72,352              119,057             834,650 

Eastern    exchange    

237,760             223,311          1,130,398 

Cash   items    

23,890                 7,486               56,391 

State   bonds    

909,303             995,283             831,810 

Real   estate   

21,798              39,427             304,677 

Miscellaneous     

39,388               22,660             330,979 

Total    resources    

$3,685,688        $3,191,881      $15,984,223 

LIABILITIES: 

Capital    

$624,105            $660,200        $4,114,500 

Circulation     

829,658             917,768         7,048,367 

Safety   fund    

572,670             479,600               44,510 

Due  other  banks  

88,830               69,927             240,745 

Due  depositors   

1,327,436             972,728          3,448,954 

116,850               30,007             825,391 

Bills  payable    

18,973              44,724 

Discounts    

49,688               42,115             210,534 

Dividends  unpaid    

769                    286                4,255 

Miscellaneous     

75,680                    311                2,444 

Total  liabilities  

$3,685,688        $3,191,881      $15,984,223 

Feb.   I860.28 

Independent        Free       Branches  of 

RESOURCES: 

Banks.            Banks.      State  Bank. 

Specie    

$120,957            $131,416        $1,576,267 

Eastern   deposits    

172,760             335,164             990,870 

Notes  of  other  banks  

157,231             350,764             390,342 

Due  from  banks  

89,966             285,268             793,735 

Loans   

1,428,692          1,414,402          8,257,368 

600,214             758  529 

Safety   fund   

794,809 

Real   estate   

75,415              29,107             611,391 

Cash   items    

9,632               62,638               85,108 

Other    resources    

72,453               37,098             855,176 

Total   resources    

$2,727,320        $3,404,389      $14,355,066 

LIABILITIES: 

Capital  stock   

$550,000           $820,945        $4,035,750 

Reserve    fund    

570,110 

Safety  fund    

548,934             365,100     

Circulation     

538,820             652,867          6,792,202 

Due  banks  and  bankers  

87,629             504,315             198,627 

Individual    deposits    

853,319             952,056          2,211,668 

Dividends   unpaid    

182                     325                 2,254 

Contingent   fund    

87,849               40,407             265,708 

Discounts  ,    interest,    etc  

30,850               62,694             150,066 

Bills  payable    

5,000               48,167 

State  tax24  

1,017     18,293 

Other   liabilities    

28,720                     678               62,216 

Total    liabilities    

$2,727,320        $3,404,389      $14,355,065 

32  Bankers'  Magazine,  Vol.  XI,  p.  817. 

23  Bankers'  Magazine,  Vol.  XIV,  p.  687. 

24  Set  off  on  profits. 


282 


Ohio  Arch,  and  Hist.  Society  Publications. 


OHIO  BANK  STATISTICS.     1846-1863  —  Continued. 


Feb.    1863.25 


Independent         Free       Branches  of 


RESOURCES: 

Banks. 

Banks. 

State  Bank. 

Specie  on    hand  

$158,255 

$648,048 

$2,216,982 

Eastern   deposits    , 

,  710,995 

673,754 

1,648,721 

Bank  notes   , 

300,312 

1,500,217 

2,012,834 

Due  from  banks  , 

126,496 

252,716 

1,028,044 

Discounts     , 

1,096,964 

2,547,976 

8,653,459 

State   bonds    , 

1,205,530 

1,748,481 

814,809 

Real  estate,   etc  

80,956 

78,770 

537,723 

Cash   items    

15,143 

182,278 

63,715 

Other  resources   

,  86,721 

71,231 

1,343,257 

Total    resources    

$3,781,372 

$7,703,471 

$18,319,544 

LIABILITIES: 

Capital     .  

$350,000 

$1,269,300 

$4,054,700 

Safety  fund    

534,900 

328,700 

725,226 

Circulation     , 

669,288 

1,142,036 

7,246,514 

Due  to  banks  , 

,  194,788 

528,750 

291,215 

Deposits    

,  1,820,474 

4,229,148 

5,631,629 

Unpaid  dividends   

205 

165 

6,847 

Contingent   fund,    etc  

116,661 

81,187 

79,025 

Discounts   , 

50,817 

113,914 

216,909 

9  350 

Other  liabilities    

44,239 

921 

67,479 

Total  liabilities  

,     ,  .     $3,781,372 

$7,703,471 

$18,319,544 

Independent 

Free 

Branches  of 

RESOURCES:     (Aug.  1868).* 

Banks. 

Banks. 

State  Bank. 

Number   of  banks  

5 

10 

36 

Specie   on    hand  

$59,570 

$618,506 

$1,712,858 

Eastern   deposits    

346,836 

404,052 

1,398,942 

Bank    notes    

275,474 

1,091,985 

1,832,942 

Due    from   banks  

72,816 

511,646 

1,075,443 

Discounts     

938,470 

1,911,427 

7,586,035 

State  bonds    

928,532 

1,332,683 

816,800 

Real   property,    etc  

58,436 

72,018 

518,760 

Cash  items  

330,520 

31,091 

73,880 

Otker  resources  

73,506 

182,982 

2,398,116 

Total    resources    

$3,084,160 

$6,156,390 

$17,413,752 

LIABILITIES: 

Capital     

$227,500 

$1,045,300 

$3,904,700 

Safety    fund    

299,900 

92,100 

728,690 

Circulation    

416,924 

596,923 

5,901,629 

Due   to   banks  

303,900 

654,489 

303,258 

Deposits     

1,673,303 

3,593,636 

6,016,  270 

Unpaid  dividends   

2t)5 

535 

11,737 

Contingent  fund    

69,141 

69,481 

87,239 

Interest   account   

68,798 

85,950 

284,728 

Bills  payable   

30,000 

Other    liabilities    

24,489 

17,976 

145,501 

Total  liabilities  

$3,084,160 

$6,156,390 

$17,413,752 

25  Bankers'  Magazine,  Vol.  XVII,  p. 
28  Ibid.,  Vol.  XVIII,   p.  255. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    283 


284 


Ohio  Arch,  and  Hist.  Society  Publications. 


OHIO  BANK  STATISTICS.     1846-1863  —  Continued. 
(In  thousands   of   dollars)27 


Independent. 

Branch. 

.2 

Q 

"2 

rt  j/j 

I1 

<u 
'5 

£ 

tn 

*rt 

'5, 
U 

d 

o 

3 
| 

G 

I 
Q 

5 
ti 
84 

si 

J8 

<u 
'o 
g, 

co 

"c3 
'5, 

6 

C 

0 

rt 

3 
o 

G 

1 
Q 

1846—  Feb. 
May 
Aug. 
Nov. 
1847—  Feb. 
May 
Aug. 
Nov. 
1848—  Feb. 
May 
Aug. 
Nov. 
1849—  Feb. 
May 
Aug. 
Nov. 
1850—  Feb. 
May 
Aug. 
Nov. 
1851—  Feb. 
May 
Aug. 
Nov. 
1852—  Feb. 
May 
Aug. 
Nov. 
1853—  Feb. 
May 
Aug. 
Nov. 
1854—  Feb. 
May 
Aug. 
Nov. 

867 
969 

175 
160 

283 
329 

477 
499 

651 
645 

2,000 
2,424 

471 
618 

998 
1,173 

1,388 
1,822 

907 
947 

992 

187 

376 

612 

602' 

3,254 

820 

1,497 

2,655 

861 

1,188 
1,126 

201 
224 

440 
450 

708 

738 

755 
960 

4,813 
4,661 

1,080 
1,320 

2,071 
2,362 

3,679 
4,179 

1,275 
1,744 

1,750 
1,616 
1,752 

295 
280 
304 

601 
613 
627 

885 
900 
1,001 

1,040 
961 
997 

7,181 
7,008 
8,180 

1,995 
1,995 
2,194 

3,302 
3,500 
3,716 

5,475 
5,633 
6,586 

2,209 
1,865 
2,098 

1,949 
1,884 
1,932 
2',145 
2,140 
2,158 
2,349 
2,530 
2,711 
2,670 
2,239 

296 
301 
331 
348 
311 
335 
334 
331 
322 
313 
281 

751 
671 
690 
698 
712 
726 
758 
865 
865 
865 
726 

1,003 
1,036 
1,107 
1,149 
1,078 
1,158 
1,250 
1,309 
1,391 
1,375 
1,158 

1,031 
1,054 
1,002 
1,151 
1,139 
205 
1,279 
1,547 
1,516 
1,511 
1,329 

9,691 
9,168 
!  10,164 
10,364 
10,546 
9,886 
10,881 
11,131 
11,994 
11,218 
11,830 

2,358 
2,497 
2,516 
2,637 
2,117 
2,070 
2,052 
2,157 
2,052 
2,008 
1,957 

,153 
,347 
,428 
,563 
,601 
4,687 
4,720 
4,748 
4,803 
4,836 
4,852 

7,227 
7,624 
7,989 
8,202 
7,829 
7,906 
8,407 
8,785 
8,660 
8,624 
8,464 

2,298 
2,228 
2,387 
2,600 
2,362 
297 
2,824 
3,077 
3,134 
3,005 
3,058 

2,005 
2,203 

306 
269 

744 

749 

1,130 
1,145 

1,180 
1,301 

8,969 
10,347 

1,979 
1,854 

4,514 
4,457 

7,750 
8,121 

3,387 
3,544 

2,192 
2,276 

198 
250 

669 
719 

912 
1,024 

1,368 
1,340 

11,525 
10,136 

1,725 
1,683 

4,422 
4,141 

8,006 
7,642 

3,985 
3,721 

2,219 

2,242 

226 
193 

719 
720 

1,042 
1,005 

1,237 
1,241 

11,182 
11,160 

1,766 
1,651 

4,294 
4,254 

7,716 
7,311 

4,053 
3,599 

2T  For  the  remainder  of  this  table  the  references  not  already  given  above  are  as 
follows:  Feb.  46,  Aud.  Kept.  2/27/46;  Nov.  46,  Ibid.,  1/6/47;  Aug.  47,  Hunt's  Mag., 
17:533;  May  48,  Ibid.,  19:224;  Nov.  48,  Bankers'  Mag.,  3:604;  May  49,  Hunt's  Mag., 
21:245;  Nov.  49,  Ibid.,  22:222;  Feb.  50,  Ibid.,  22:650;  Aug.  50,  Ibid.,  23:548;  Nov.  50, 
Ibid.,  24:91;  Jan.  51,  Ibid.,  24:487;  Aug.  51,  Ibid.,  25:467;  Nov.  51,  Ibid.,  26:224; 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    285 


OHIO  BANK  STATISTICS.    1846-1863  —  Continued. 
(In  thousands  of  dollars) 


Old. 

Free. 

u 

5 

T) 

c 

rt  co 

si 

3s 

<u 

I 

CO 

73 
'& 

rt 

U 

Circulation. 

to 

1 

U 

Q 

A 

s 

TJ 

Sjj 

l! 

oJ 

1 
C/2 

"3 

'a, 

rt 
U 

Circulation. 

Deposits. 

1846—  Feb.     . 

4,924 

729 

2',  567 

2  641 

1,124 

May     . 

4,639 

706 

2  565 

2  464 

973 

Aug  

Nov  

4,046 

ei2 

3  954 

2  407 

935 

1847—  Feb.    . 

May    . 

4,936 

745 

2  561 

2  894 

1  327 

Aug     .   . 

4  709 

779 

2  561 

2  855 

1  467 

Nov  

1848—  Feb.    . 

May    . 

2,809 

482 

2,2ii 

1  665 

1  518 

Aug  

3,476 

457 

2,311 

1,398 

1,373 

Nov  

3,747 

403 

2  311 

1  580 

1  075 

1849—  Feb  

May    .... 

3,342 

373 

2,011 

1,021 

1,001 

Aug  

3,392 

412 

2,011 

1,203 

1,087 

Nov  

3,499 

396 

2,011 

1,349 

1,046 

1850—  Feb.    . 

3,796 

385 

2,011 

1,475 

1,096 

May    . 

3,644 

317 

2  Oil 

1,277 

951 

Aug  

3,557 

346 

2,011 

1,302 

735 

Nov  

3,829 

364 

2,011 

1  403 

980 

1851—  Feb  

4,386 

443 

2,011 

1,739 

888 

May    . 

4,450 

42'6 

1,961 

1,637 

956 

Aug  

3,654 

438 

1,924 

1,637 

1,000 

Nov  

3,814 

418 

1,924 

1,537 

972 

1852—  Feb  

May    . 

Aug  
Nov  
1853—  Feb  

3,153 
3,169 

448 
384 

1,548 
1,548 

1,454 
1,488 

1,093 
1,214 

1,042 
1,069 

131 
123 

359 
362 

542 
619 

967 
913 

May    .... 
Aug  
Nov  

3,678 
1,738 

403 
340 

1,548 
936 

1,525 
1,474 

1,054 
511 

1,363 
1,236 

155 
172 

659 
695 

803 
850 

1,187 
1,333 

1854—  Feb  
May    .... 

2,715 
2,514 

186 
99 

811 
711 

451 
399 

1,062 
894 

1,265 
1  367 

141 

134 

720 

835 

629 
792 

1,332 

Aug  

Nov  

May  53,  Ibid.,  29:352;  Feb.  54,  Ibid.,  30:605;  May  54,  Ibid.,  31:91;  Jan.  55,  Ibid., 
32:352;  May  56,  Ibid.,  35:99;  Nov.  56,  Aud.  An.  Rept.  1856,  p.  67;  Nov.  57  Aud. 
An.  Rept.  1857,  p.  454;  Feb.  58,  35th  Cong.  1st  Sess.  House  Doc.  107:286-90;  Aug.  and 
Nov.  58,  Bankers'  Mag.  13:892;  Feb.  59,  Ibid.,  14:687;  Aug.  59,  Hunt's  Mag.  42:86; 
Nov.  59,  Ibid.;  Nov.  60,  Aud.  An.  Rept.  1860,  p.  40;  Feb.  61,  Bankers'  Mag.  16:789; 
Nov.  61,  Aud.  An.  Rept.  1861,  p.  94;  Feb.  62,  Bankers'  Mag.  16:789;  May  63,  Ibid., 
17:863. 


286 


Ohio  Arch,  and  Hist.  Society  Publications. 


OHIO  BANK  STATISTICS.     1846-1863  —  Continued. 
(In  thousands  of  dollars) 


Independent. 

Branch. 

A 

3 

c 
rt  "3 
gfl 

Is 

o 

1 
co 

•a 

rt 
U 

Circulation. 

en 

1 

Q 

3 

c 

a  at 

<u 
ft 
co 

•a 

rt 
U 

Circulation. 

Deposits. 

1855—  Feb.    .  . 
May 

1,598 

145 

707 

870 

826 

9,388 

1,396 

4,105 

6,620 

2,621 

Aug.    .  . 
Nov.    .. 
1856—  Feb.     .  . 
May    .. 
Aug.   .  . 

1,701 
1,667 
1,817 

160 
207 
175 

538 

475 
588 

874 
830 
894 

,013 
,119 
,061 

i6,085 
10,191 
10,200 

1,634 
1,741 
1,633 

4,095 
4,095 
4,135 

7,520 
7,480 
7,112 

2,959 
3,496 
3,013 

Nov.    .. 
1857—  Feb.     .  . 
May    . 

1,914 
1,926 

185 
195 

588 
624 

911 

830 

,162 
,327 

10,409 
10,171 

1,658 
1,659 

4,115 
4,116 

7,317 
7,048 

3,063 
3,449 

154 
160 

158 

"575' 
500 

708 

566 
384 

"'733' 
967 

"s'.iee" 

6,834 

1,415 
1,269 
1,420 

"4',125' 
3,725 

6,571 
6,401 
5,286 

"'i',847 
1,914 

Nov.    .. 
1858—  Feb.     .  . 
May    . 

i,393 
1,462 

Aug.    .  . 
Nov.    .. 
1859—  Feb.    .. 
May    .. 

1,401 
1,449 
1,492 

154 

122 
151 

663 
600 
713 

541 

486 
607 

833 
942 
835 

8,088 
8,518 
8,378 

1,731 
1,596 
1,742 

4,126 
4,125 
4,105 

6,509 
6,926 
7,258 

"'21343 

Aug.    .  . 
Nov.    .. 
1860—  Feb.    .. 
.       May    .. 
Aug 

1,447 
1,454 
1,429 

122 
122 
121 

613 
650 
550 

563 
541 
539 

922 
868 
853 

8,042 
8,409 
8,257 

1,579 
1,468 
1,576 

4,105 
4,106 
4,036 

6,532 
6,528 
6,792 

2,467 
2,190 
2,212 

Nov.    .. 
1861—  Feb.    .. 
May    . 

1,444 
1,199 

143 
142 

632 
450 

576 

275 

1,037 
724 

9,050 
8,150 

1,625 
1,901 

4,105 
4,105 

7,404 
7,068 

2,766 
2,295 

Aug.    .  . 

Nov.    .. 
1862—  Feb.     .  . 
May    . 

1,271 
1,253 

197 
180 

575 
575 

676 
683 

1,186 
1,275 

8,143 
7,981 

2,365 

2,722 

4,105 
4,105 
4,092 

8,136 

7,768 

2,795 
2,862 

Aug.    .  . 

Nov.    .. 
1863—  Feb.    .  . 
May 

1,097 

158 

350 

669 

1,820 

8,653 

2,217 

4,055 

7,247 

5,632 

Aug.    .  . 
Nov 

938 

60 

228 

417 

1,673 

7,586 

1,399 

3,905 

5,902 

6,016 

Banking  and  Currency  in  Ohio  Before  the  Civil  War.    287 


OHIO  BANK  STATISTICS.     1846-1863  —  Concluded. 
(In  thousands  of  dollars) 


Old. 

Free. 

.2 

Q 

Id 

If 

_«j 
'3 
& 

m 

! 
'a, 
a 
U 

Circulation. 

Deposits. 

s 

t3 

a* 

I! 

.4) 

°3 
I 

m 

*rt 

•a 

6 

Circulation. 

Deposits. 

1855—  Feb.      .  .  . 
May      .  .  . 

1,621 

121 

716 

581 

845 

1,293 

121 

716 

581 

845 

Aug. 

Nov.      .  .  . 
1856—  Feb.      .  .  . 
May      .  .  . 

Aug 

1,786 
1,721 
2,150 

2'6 
12 
26 

223 
75 

3 

3 
3 

1,602 
1,494 
1,355 

1,293 
1,343 
1,162 

140 
137 
137 

837 
853 
738 

757 
768 
769 

878 
986 
849 

Nov  

1857  —  Feb 

1,414 

20 

189 

4 

1,330 

1,396 
1  327 

154 

155 

694 
660 

921 
918 

913 
973 

May    .... 

Aug 

158 

853 

Nov. 

1  234 

187 

679 

670 

826 

1858  —  Feb 

1  263 

158 

704 

529 

1  025 

May    .... 

Aug 

1  061 

101 

615 

538 

746 

Nov  

1,204 

127 

609 

630 

1,140 

1859—  Feb 

1  216 

124 

541 

676 

824 

May    .... 

Aug. 

1  136 

135 

662 

649 

954 

Nov 

.. 

1  403 

117 

720 

666 

985 

186o_Feb 

1  414 

131 

821 

663 

952 

May    

. 


Aug.    . 

Nov 

1  754 

235 

1  125 

655 

1  407 

1861—  Feb. 

1  548 

183 

1  137 

619 

May    .... 

Aug  

Nov 

1  337 

485 

1  Oil 

710 

1  684 

1862—  Feb. 

767 

234 

'516 

767 

888 

May    .... 

Aug  

Nov 

1863  —  Feb 

2  548 

648 

1  269 

1  142 

4  229 

May    . 

1  911 

619 

1  045 

597 

3  594 

Nov. 



288 


Ohio  Arch,  and  Hist.  Society  Publications. 


BANK  STATISTICS  FOR  UNITED   STATES,  1774-1804.28 


Year. 

Number  of  banks. 

Millions  of  dol- 
lars. 

i* 

rt 

# 

»!* 

'Gc 
o.2 

11 

<u  o 

JC 

13 
o 

IH 

y 

"3 

'S 

6 

1774  . 

4  0 

1774 
1784 
1790 
1791 
1792 
1793 
1794 
1795 
1796 
1797 
1798 
1799 
1800 
1801 
1802 
1803 
1804 

1784  

3 
4 
6 
16 
17 
17 
23 
24 
25 
25 
26 
28 
31 
32 
36 
39 

10.0 
9.0 
16.0 
18.0 
20.0 
21.5 
19.0 
16.5 
16.0 
14.0 
17.0 
17.5 
17.0 
16.5 
16.0 
17.5 

2.0 
2.5 
9.0 
11.5 
11.0 
11.6 
11.0 
10.5 
10.0 
9.0 
10.0 
10.5 
11.0 
10.0^ 
11.0 
14.0 

2.1 
2.5 
12.9 
17.1 
18.0 
18.0 
19.0 
19.2 
19.2 
19.2 
21.2 
21.3 
22.4 
22.6 
26.0 
39.5 

1790  

1791  

1792  

1793  

1794  . 

1795 

1796  ..   .  .    

1797     ..   .        .... 

1798     

1799  

1800  

1801  

1802  

1803  

1804  

28  Above  estimates  are  from  Blodgett's  Economica,  p.  66,  and  are 
given  in  Secretary  Crawford's  report  on  the  condition  of  the  banks, 
Jan.  3,  1836,  p.  216. 

See  also  Report  of  Comptroller  of  the  Currency,   1876,  p.  XXXIX. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    289 

STATISTICS  OF  BANKS  IN  THE  UNITED  STATES,  1811-1840. » 
(In  thousands  of  dollars). 


Date, 
Jan.  1. 

«-M 

0 

S-i 

«  ri 

*&*i 

II 

% 

Loans  and 
discounts. 

cJ 

'o 

<u 

£ 

Circulation. 

Deposits. 

L 

3 

"S< 

d 

1811 

89 

$15  400 

$28  100 

$52  601 

1815 

208 

17  000 

45  500 

82  259 

1816 

246 

19  000 

68  000 

89  822 

1820 

308 

19  820 

44  863 

$35  950 

137  110 

1830 

330 

$200  451 

22  114 

61,323 

55  559 

145  192 

1834 

506 

324  119 

94,839 

75  666 

200  005 

1835 

558 

365,163 

43,937 

103,692 

83,081 

231  250 

1836  

567 

457,506 

40,019 

140,301 

115,104 

251,875 

1837  

634 

525,115 

37  915 

149,185 

127,397 

290,772 

1838  

663 

485,631 

35,184 

116,138 

84,691 

317  636 

1839  

662 

492,278 

45,132 

135,170 

90,240 

327  132 

1840  

722 

462,896 

33,105 

106,968 

75  696 

358,442 

SAME  FOR  STATE  BANKS  ONLY.30 


1811 

88 

$9,600 

$22,700 

$42  610 

1815  

208 

17,000 

45,500 

82,259 

1816  

246 

19,000 

68,000 

89,822 

1819 

$73  623 

9  828 

35  770 

11  192 

72  340 

1820 

307 

16  672 

40  641 

31  244 

102  110 

1829 

329 

14  939 

48  274 

40  781 

110  192 

29  Elliott's  Funding  System,  p.  984  — House  Ex.  Doc.  No.  15,  1st 
sess.,  28th  Cong. 

*°  Figures  for  1819  from  Sec.  Crawford's  Report  to  Cong.,  Feb.,  1820. 
For  the  other  years  —  Gallatin's  Considerations  on  the  Currency  and 
Banking  Systems  of  the  U.  S.  (Phila.,  1831),  pp.  45,  49'  and  53. 


19 


290 


Ohio  Arch,  and  Hist.  Society  Publications. 


STATISTICS  OF  STATE  BANKS  IN  THE  UNITED  STATES, 

1834-1863. 31 

(In  thousands  of  dollars). 


Year. 

Number  of 
banks. 

t3 

rt  i2 
C 

Cft  3 

*8 

nS_c/i 

b*o 

J 

o3 

| 

o< 
in 

15 
'S 

Oj 

u 

Circulation. 

Deposits. 

1834 

506 

$324  119 

$200  005 

$94  839 

$75  666 

1835 

704 

365,163 

$43,937 

231,250 

103,692 

83,081 

1836 

713 

457,506 

40,019 

251,875 

140,301 

115  104 

1837  
1838   

788 
829 

525,115 

485,631 

37,915 

35,184 

290,772 
317,636 

149,185 
116,138 

127,397 

84,691 

1839  

840 

492,278 

45,132 

327,132 

135,170 

90,240 

1840  i 

901 

462,896 

33,105 

358,442 

106,968 

75,696 

1841 

784 

386  487 

34  813 

313  608 

107,290 

64,890 

1842 

692 

323  957 

28,440 

260  171 

83,734 

62  408 

1843 

691 

254  544 

33,515 

228  861 

58,563 

56  168 

1844  
1845    

696 
707 

264,905 
288,617 

49,898 
44,241 

210,872 
206,045 

75,167 

89,608 

84,550 

88,020 

1846  

707 

312,114 

42,012 

196,894 

105,552 

96,913 

1847   

715 

310,282 

35,132 

203,070 

105,519 

91,792 

1848  

751 

344,476 

46,369 

204,838 

128,506 

103,226 

1849  

782 

332,323 

43,619 

207,309 

114,743 

91,178 

1850  

824 

364,204 

45,379 

217,317 

131,366 

109,586 

1851 

879 

413  756 

48,671 

227  807 

155  165 

128,957 

1852 

1853    .  . 

750 

408,943 

47,138 

207,908 

146  072 

145,553 

1854  .  ... 

1,208 

557,397 

59,410 

301,376 

204,689 

188,188 

1855  

1,307 

576,144 

53,944 

337,177 

186  952 

190,400 

1856   

1,395 

634,183 

59,314 

343,874 

195,747 

212,705 

1857  

1,416 

684,456 

58,349 

370,834 

214,778 

230,351 

1858 

1  422 

583  165 

74  412 

394  622 

155  ?08 

185  932 

1859  

1,476 

657,183 

104,537 

401,976 

193,306 

259',  568 

1860 

1  562 

691  945 

83,594 

421  880 

207  102 

253  802 

1861 

1  601 

696  778 

87,674 

429  ,  592 

202  005 

257,229 

1862 

1  492 

646  ,  677 

102  146 

418,139 

183  792 

296  322 

1863 

1  466 

648,601 

101  ,  227 

405,045 

238,677 

393  686 

31  From  Report  of  the  Comptroller  of  the  Currency,  1876,  pp.  XCIV 
and  XCV. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    291 


CINCINNATI   PRICES.32 

(On  or  about  Dec.  1.) 

1829-1858. 


3 

,a 

I 

"1 

ft 

£ 

en 

-3 

v 

IH 

3 

,0 

u 

o 

jd 

£ 

^ 

c 
8 

la 

tl 
Pi 

u 

ft 

§ 

ft 

o 
Pu 

ft 

ft 

U 

ft 

.d 
£~ 

6 

3 

c 

.55 

fi 

£3 

*O 

i 

w 

»2  %$ 

«r 

..1 

O 

E 

c3 

•fl 

0 

ffi 

5 

3 
C/3 

§ 

H 

1829     

$0  50  | 

$4  12% 

$0  25 

$024% 

$2.60 



$0  06 

$0  09 

$0  15 

$0  12 

1830     ...   . 

56 

362% 

20 

24 

2.60 

$950 

06 

09% 

19 

12% 

1831     .  .  . 

56 

3  62% 

20 

24 

2'.60 

950 

06 

07 

15% 

10% 

1832     .  .  . 

75 

4  25 

37 

25 

2.60 

10  50, 

06 

06% 

14 

12 

1833     .  .  . 

62 

3  55 

31 

25 

2.60 

10  00 

10 

15 

13 

1834     ... 

62 

3  31 

31 

37% 

3.12% 

10  00 

07% 

15 

11 

1835     .  .  . 

1  06 

6  37 

32 

37% 

3.12% 

16  00 

08% 

10 

14% 

12 

1836     ... 

1  25 

8  25 

33 

34 

7.00 

19  00 

12% 

10% 

15 

14 

1837     .  .  . 

1  12 

6  75 

40 

36% 

3.50 

17  50 

06% 

07% 

13% 

14 

1838     ... 

1  15 

6  15 

62% 

42 

6.00 

19  50 

10 

15 

14% 

1839     .  .  . 

65 

4  00 

31% 

32 

3.00 

13  00 

08 

07% 

15 

13% 

1840     .  .  . 

60 

3  60 

60 

18% 

4.75 

15  00 

08 

07% 

13 

11 

1841     ... 

1  00 

5  30 

30 

15% 

2.25 

6  25 

05 

07 

12% 

10% 

1842     .  .  . 

45 

2  62 

20 

13% 

1.75 

5  00 

04% 

07% 

10% 

09 

1843     .  .  . 

60 

3  62' 

20 

18 

2.45 

7  60 

05 

06% 

08 

09 

1844     .  .  . 

70 

3  70 

33 

25 

2.60 

8  00 

05% 

05% 

07% 

08% 

1845     ... 

90 

5  00 

31 

23 

4.37 

12  00 

07% 

06% 

08% 

08% 

1846     .  .  . 

60 

3  50 

25 

16% 

2.85 

8  00 

06 

07 

08% 

8% 

1847     .  .  . 

1  00 

4  95 

33 

17% 

3.20 

9  00 

06% 

05 

08% 

10% 

1848     .  .  . 

75 

3  80 

28 

16 

3.30 

9  00 

06 

04% 

07% 

10 

1849     .  .  . 

80 

4  35 

30 

21 

2.80 

8  00 

05% 

04% 

12% 

10 

1850     . 

70 

3  65 

33 

23% 

4.00 

10  25 

07 

06 

12 

9 

1851     .  .  . 

58 

2  95 

30 

16 

4.55 

12  00 

07 

05% 

10 

10 

1852     .  .  . 

75 

4  00 

43 

20% 

6.25 

16  75 

10% 

05 

10 

12 

1853     .  .  . 

1  00 

5  30 

37 

21% 

4.00 

11  00 

08% 

05 

12% 

14 

1854     .  .  . 

1  50 

7  50 

56 

31 

5.00 

12  50 

09 

05% 

11% 

15 

1855     ... 

1  62 

8  10 

43 

34% 

6.30 

16  00 

10% 

07% 

12% 

15 

1856     .  .  . 

1  10 

5  30 

45 

25 

6.00 

15  00 

10% 

10% 

11% 

13 

1857     ... 

80 

4  40 

40 

17% 

5.00 

13  00 

09 

07% 

11 

12 

1858     .  .  . 

1  03 

4  40 

70 

23 

6.85 

17  00 

10% 

07% 

12 

12% 

33  3rd  Annual   Report  Ohio  Com.    Statistics,   1859,    p. 
1859,  p.  846. 


Or  Exec.   Doc.   Part  1, 


292 


Ohio  Arch,  and  Hist.  Society  Publications. 


OHIO  FINANCES  FROM   1833  TO   1856. 83 


Year. 

Foreign  and 
domestic 
debt. 

A  £> 

.5  § 

i_  co 
rt  -M 
*  «* 

III 

< 

Taxable  prop- 
erty real  and 
personal. 

Gross  rev- 
enues. 

*  ?! 

<y  « 
3 
in  ."t! 
*•« 

o  § 
*-  a 
O 

1833 

$4  750,000 

$285,000 

$78,019,526 

$298,739 

$288,739 

1834 

4  891,669 

293,500 

75,593,312 

261,326 

277,949 

1835 

4,979,287 

294,757 

94,438,016 

201,766 

235,365 

1836 

5,857,833 

351,470 

85,812,382 

301,059 

269,660 

1837  

6,136,516 

368,190 

91,591,745 

327,868 

287,560 

1838  

6,905,790 

414,348 

106,953,018 

451,757 

324,702 

1839  

10,030,162 

601,809 

111,224,197 

655,905 

632,823 

1840 

14  012  230 

770,822 

112  037  861 

306,498 

295  090 

1841 

15  573,354 

934,401 

128,353,657 

255,832 

192  279 

1842 

16  947,325 

1,016,839 

132,343,835 

292,224 

227,863 

1843 

18,668,321 

1,120,099 

133,663,794 

328,270 

233,462 

1844  

19,276,751 

1,167,444 

136,142,666 

371,963 

239,141 

1845  

19,251,180 

1,140,706 

144,160,469 

1,583,456 

1,869.937 

1846  
1847 

19,246,002 
19  233  847 

1,164,260 
1  163  509 

150,293,132 

409  897,379 

2,081,384 
2,644  785 

2,038,027 
2  397  605 

1848 

19  173  223 

1,159  893 

419,897  379 

2,473,702 

2,137,194 

1849 

19  026  200 

1,147,854 

429,665,629 

2,511,119 

2,383,135 

1850  ..  .. 

18  744  594 

1,124,536 

439,876,340 

2,536,558 

2,961,581 

1851  

15,584,893 

923,343 

462,148,620 

2,878,656 

2,696,369 

1852  

15,520,768 

919,496 

507,581,911 

3,016,403 

2,736,060 

1853  
1854  
1855  
1856 

15,218,129 
14,524,886 
14,008,295 
14  008  274 

901,191 
859,596 
829,253 
829,253 

593,396,848 
866,929,982 
860,877,354 
820  661,037 

2,865,907 
3,715,103 
3,631,173 
3,588,353 

2,696,118 
3,893,253 
3,512,844 
3  712  206 

88  Figures    of    Ohio    State   Auditor.  —  Bankers'    Mag.    11:727    (Mar. 
1857). 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    293 


PROFITS   OF   STATE  BANKS   AND   STOCK  BANKS   IN   OHIO, 
JANUARY   1,   1854.86 


Name. 

Location. 

1 

0 
«J 

Ort 

&' 

Dividends 
in  1853. 

o 
"^eo 

*  cfoo 

£1. 

•3'$?  si 
•S«Q 

H 

Amount. 

%  of  Cap. 

State    Banks.3* 
Athens  Branch     

Athens      

July     20,  '48. 
Dec.       1,  '45. 
Feb.       1,  '48. 
July     25,  '45. 
Nov.    25,  '45. 
Oct.      25,  '45. 
July     10,  '45. 
Oct.      13,  '45. 
June    11,  '45. 
Feb.       7,  '48. 
Aug.    12,  '47. 
Aug.    17,  '47. 
May     12,  '46. 
Aug.    12,  '45. 
Aug.      1,  '48. 
Aug.      7,  '47. 
Jan.      25,  '47. 
Sept.      1,  '45. 
Jan.     18,  '48. 
Dec.     15,  '49. 
Aug.    17,  '47. 
Sin.      23,  '47. 
ov.      3,  '45. 
Aug.    18,  '45. 
July     15,  '45. 
Mar.    12,  '47. 
Sept.      1,  '47. 
Feb.     12,  '48 
May     19,  '47. 
May     20.  '47. 
Feb.       1,  '48. 
Mar.      9,  '47. 
July     19,  '47. 
Nov.    16,  '46. 
Nov.    21,  '45. 
July     15,  '45. 
Nov.    15,  '45. 
Feb.       7,  '48. 
Auer.      7.  '45. 

$20,000 
20,000 
11,000 
30,000 
35,000 
30,000 
10,700 
9,350 
15.000 
10,000 
18,630 
6,000 
10,000 
29,750 
11,000 
10,000 
10,000 
16,000 
16,000 
12,000 
7,468 
16,000 
16,000 

'25i666' 
15,000 
10,000 
12,000 
21,969 
14,000 
13,390 

20 
20 
11 
12 
20 
20 
10 
9.9 
12 
10 
18.6 
6 
10 
17 
11 
10 
10 
16 
16 
12 
10 
16 
16 

"26" 
15 
10 
12 
18 
14 
13 

$77,231 
135,000 
65,360 
263,155 
261,232 
161,899 
143,736 
88,546 
133,117 
63,940 
79,963 
61,173 
75,900 
193,512 
61,631 
67,295 
89,306 
98,873 
84,955 
45,653 
56,921 
119,425 
123,620 
46,376 
150,374 
70,594 
65,286 
74,199 
110,977 
77,468 
81,936 
95,942 
140,614 
155,335 
75,636 

Belmont   Branch    

Bridgeport     
Chillicothe     
Cleveland    

Chillicothe   Branch 

Commercial  Branch       

Toledo 

Dayton    Branch    

Delaware     Co.     Branch  
Exchange    Branch    

Columbus     
Ashtabula     

Farmers'   Branch  

Mansfield    

Ripley     

Farmers'   Branch  

Salem     

Washington     .... 
Cadiz    

Harrison   Co.    Branch      

Jefferson  Branch       

Steubenville    .... 
Mt.    Vernon  

Logan    Branch        

Mad    River   Valley    Branch  

Springfield    

Marietta             ... 

Mechanics'  &  Traders'  Branch*. 

Cincinnati    
Cleveland 

Miami  Co.   Branch....  

Troy        

Mt     Pleasant    Branch 

Mt.    Pleasant   ... 
Zanesville     
Norwalk     
Piqua     

Muskingum  Branch   

Piqua    Branch     

Portage  Co.  Branch  

Ravenna    
Portsmouth    

Preble   Co.    Branch2  

10,000 
24,000 
15,000 

10 
16 

15 

Chillicothe     
Cuyahoga    Falls. 
Toledo 

Summit  Co.  Branch     

Toledo   Branch 

Union       

Massillon    

21,000 
8,900 
12,000 

14 
9.9 
12 

139,638 
51,748 
168,273 

Wayne    Co     Branch 

Wooster 

Xenia   Branch    ., 

Xenia    . 

34  Forty-one    branches    were    organized.     One    at    Cincinnati  soon    wound    up    its 

business    as    a    branch    bank    and    continued   as    a    private    bank  under    the    name    of 

Groesbeck  &  Co.    Another  at  Newark,    organized  Jan.  15,    1849,  went  into   the  hands 
of  a   receiver   in   May,    1852,   and  was  closed. 


294 


Ohio  Arch,  and  Hist.  Society  Publications. 


PROFITS   OF   STATE   BANKS   AND    STOCK  BANKS   IN    OHIO, 
JANUARY  1,  1854— Concluded. 


Name. 

Location. 

C 

rt 

6 

«+i  n 
°.° 
<u  "ca 

|.g 

Dividends 
in  1853. 

0 

JUs 

O  C  00 

£]L 

—  'So  o 

rt  <u  <u 

SMQ 

H 

Amount. 

%  of  Cap. 

Independent  Banks. 

Painesville    
Cleveland    ...     . 

April   29,  '45. 
July       9,  '45. 
July       1,  '45. 
July     23,  '45. 
Sept.      9    '45 

$13,198 
12,000 
11,580 

7.6 
12 

8 

$85,874 
43,496 
95,335 

Canal   Bank   of  

City    Bank    of  
City    Bank    of 

Cleveland    
Columbus    ,  

City  Bank  of* 

3,549 
107,073 
142,544 
30,794 
33,801 

Commercial  Bank  of*  

Cincinnati    

April    15,  '45. 
Oct.        2,  '45. 
Nov.    15,  '50. 
Sine      4,  '46. 

14,505 

13.9 

Franklin    Bank   of  

Mahoning    Co.    Bank  

Youngstown     
Sandusky 

14,558 

9.2 

Sandusky    City    Bank     

Seneca    County    Bank 

Tiffin 

ov     18    '47 

Western   Reserve   Bank            .... 

Warren    .  . 

July       1,  '45. 

30,000 

9.9 

165,292 

Total 

$95,841 

$2,500 
9,000 
5,110 
4,025 
6,179 
5,552 
7,600 
8,800 
10,000 

2.6 
9 
10 
6.5 
6.9 
8.8 
12 
4.5 
10 

$710,759 

$3,198 
25,282 
10,132 
6,860 
14,198 
11,882 
11,508 
18,350 
19,972 

Free   Banks. 
Bank   of   Commerce  

Cleveland    
Marion        

Dec.       6,  '52. 
Sept.    27,  '51. 
Aug.    15,  '51. 
Dec.     15,  '51. 
Sept.    25,  '51. 
July     12,  '51. 
July       1,  '51. 
Aug.     18,  '51. 
Aug.    18,  '51. 
Aug.    30.  '51. 
July       2,  '51. 
Nov.      8,  '51. 
Jan.       1,  '51. 

Bank    of    Marion  

Champaign    Co     Bank 

Urbana    
Franklin 

Franklin  Bank  Portage  Co  

Forest   City   Bank  
Iron  Bank  of  Ironton  

Cleveland    
Ironton     

Merchants'   Bank  of 

Massillon    ,  
Dayton     

Miami   Valley   Bank   of  

Pickaway  Co.   Bank....              ... 

Circlevile    . 

Savings   Bank  of*  

Cincinnati     
Springfield     

Springfield   Bank   

Stark   County   Bank 

3,000 
11,230 

10 
9.7 

5,200 
20,530 

Union  Bank   

Sandusky   City... 

Total     

$72,996 

$147,112 

35  Ohio  Exec.   Doc.,    Part  II,   1853,   p.  326.    Auditor's  Report,   4/8/54. 

*  These  banks  failed  to  make  return  of  their  taxable  property,  as  required  b} 
law,  and  subjected  themselves  to  a  penalty  of  50%.  In  the  case  of  Mechanics'  & 
Traders'  Bank  the  penalty  was  remitted  on  payment  of  its  taxes. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    295 


STATEMENT  OF  THE  BANK   OF  THE   OHIO  VALLEY, 
MAY  6,  1862.36 

RESOURCES. 

hio  State  6%  stocks,   par $200,579  87 

Little   Miami  and  Cincinnati,    Hamilton  &  Dayton   R.   R. 

bonds    24,425  50 

United  States  one  year  certificates 22,00000 

Eastern   exchange    92,905  30 

Sterling  Exchange  at  4  :80 4,186  54 

Real  estate  and  personal  property 34,785  71 

Bills    discounted    461,863  69 

Suspended   debt    (good) 11,187  39 

Due  from  banks  and  bankers 29, 674  25 

Cash,  bank  notes  — 

United   States   demand   notes $355,50000 

Ohio  and  Indiana  notes 216,200  00 

Kentucky   notes    10,000  00 

Gold  coin   471,683  00 

Silver    coin    8,047  10 

Cash  items    29,997  89 

1,071,427  99 

$1,953,036  24 
LIABILITIES. 

Capital   Stock    $500,000  00 

Undivided  profits    46,883  31 

Bank  notes   in   circulation 83,498  00 

City   depositors    940,446  04 

Due  banks  and  bankers. 376,208  89 


$1,953,036  24 


Cincinnati  Daily  Gazette,    May  8,    1862. 


296 


Ohio*  Arch,  and  Hist.  Society  Publications. 


PRICES   PAID   BY   BROKERS  AND   OTHERS   FOR   NOTES   OF 
OHIO  BANKS  THAT  FAILED,    1831-1843. 87 


Names  of  banks. 

Circulation  at 
time  of  failure. 

Prices  paid. 

Consequent  loss 
to  note  holders. 

$ 
§ 

ffi 

CO 

<L> 

e 

& 

2 

9) 

> 

Commercial    Bank    of    Lake 
Erie    

$133,324 
198,237 
302,903 
78,442 
368,983 
42,472 
58,800 
55,693 
90,000 
173,970 
281,277 
34,010 
89,898 
125,000 
125,000 
112,904 
380,000 
150,000 
34,000 

95 
85 
par 
87 
70 
50 
75 
50 
50 
94 

Par 
50 
70 
50 
50 
94 

50 
30 
75 
50 
30 
12 
30 
12 
12 
70 
75 
12 
20 

75 

45 
90 
65 
50 
20 
50 
25 
35 
75 
87 
25 
50 
20 
40 
75 

$33,331 
109,030 
30,290 
27,455 
184,492 
33,978 
29,400 
41,770 
58,500 
43,493 
36,566 
25,508 
44,949 
100,000 
75,000 
28,226 
380,000 
90,000 
34,000 

Bank  of  Cleveland  

Franklin  Bank  of  Columbus. 
Farmers'  Bank  of  Canton  
Urbana  Banking  Co 

Lebanon  Miami  Banking  Co.. 
Miami  Exporting  Co 

Bank  of  Cincinnati 

Bank  of  Steubenville 

Lancaster  Bank   .  .         .   . 

Bank  of  Chillicothe 

Bank  of  Circleville  

Manhattan  Bank   

West  Union  Bank  

German  Bank  of  Wooster... 
Commercial  Bank  of  Scioto. 
Gallipolis   Bank   

8 
50 

Granville  Alexandrian  Soc.. 
Ohio  Railroad  

50 

20 

40 

$1,405,988 

Banking  and  Currency  in  Ohio  Before  the  Civil  War.    297 


TABLE  SHOWING  THE  PREMIUM  CHARGED  FOR  EXCHANGE 

AT  THE  FOLLOWING  PLACES,   AS  TAKEN  FROM 

LETTERS,  ETC.,  IN  THE  OFFICE  OF  THE 

BANK  COMMISSIONERS. 


Year. 

Columbus. 

Canton. 

Circleville. 

Cincinnati. 

Cleveland. 

Average. 

1832  . 

1 

1 

1 

1833  

1 

1 

1 

1834  

1 

W2 

1 

1835  

\y2 

WA 

l/2 

1 

1/4 

1836  

\y* 

iy2 

iy2 

r 

lr/2 

\y2 

1837  

$M 

&/2 

2 

3 

m 

zy* 

1838  

21A 

4 

6 

5 

2 

5 

1839  .... 

3 

10 

254 

1^  to  14 

8 

1840  .    ..     ... 

6 

10 

W-2. 

V/2  to  14 

8 

1841  . 

12 

8l/2 

13 

10 

154  to  14 

12 

1842  

2 

8*A 

9 

14 

\y2  to  14 

8 

1843  

1 

2 

1^2 

1*A 

"From  special  report  of  bank  commissioner,  B.  Latham,  1844.  Mr. 
Latham  estimated  that  from  1832  to  1843  the  imports  of  merchandise  into 
Ohio  amounted  to  approximately  $227,000,000  on  which  the  premiums 
paid  must  have  been  about  $11,000,000,  a  loss  due  to  the  depreciated 

currency. 


298 


Ohio  Arch,  and  Hist.  Society  Publications. 


BIBLIOGRAPHY. 


OHIO   STATE  PUBLIC  DOCUMENTS. 

Laws  of  Northwest  Territory,   1791-1802. 

Ohio  Constitution,   1802. 

Revised  Statutes  of  Ohio  (Chase),  1833. 

Revised  Statutes  of  Ohio    (Swan),  1841. 

Ohio  Constitution,  1851. 

Laws  of  Ohio,  1803-1819. 

General  Laws  of  Ohio,  1820-1865. 

Local  Laws  of  Ohio,  1820-1865. 

Ohio  Senate  Journal,  1803-1836. 

Ohio  House  Journal,  1803-1836. 

Ohio  Executive  Documents,   1836-1865. 

Annual  Reports  of  the  Bank  Commissioners,  1839  and  40,  1842-44. 

Special  Reports  of  the  Bank  Commissioners,  1839-44  (Numerous.  That 
of  July  25,  1842,  occupies  302  pages  of  the  Senate  Journal  Ad- 
journed Session  1842). 

Annual  and  Special  Reports  of  the  Auditor  of  State.  (In  House  and 
Senate  Journals  prior  to  1836;  in  Exec.  Doc.  after  1836). 

Governors'  Messages  (In  H.  &  S.  Jour,  prior  to  1836;  in  Exec.  Doc. 
after  1836). 

Report  of  Special  Examiner  on  the  condition  of  Ohio  Banks.  (Charles 
Reemelin,  1854;  James  T.  Claypoole,  1859). 

Annual  Reports  of  Commissioner  of  Statistics,  1857-68. 

UNITED  STATES  DOCUMENTS. 

Reports  on  the  Finances,  6  volumes,  1789-1849. 

Report  of  Secretary  of  the  Treasury,  Alexander  Hamilton,  Dec.  13,  1790. 
Report  of  Secretary  of  the  Treasury,  G.  W.  Campbell,  Sept.  23,  1814. 
Report  on  Currency  to  House  of   Representatives  by  Secretary  of  the 

Treasury,  Wm.  H.  Crawford,  Feb.  24,  1820. 
Statement  by  Secretary  of  the  Treasury,  Levy  Woodbury,  Jan.  5,  1836. 

H.  R.  Doc.  No.  42.    24th  Cong.     1st  Sess. 
Annals  of  Congress,   15th  Cong.     2nd  Sess.     Part  I,  pp.  335,  552,  922, 

923;   Part  II,  pp.  1409,  1411-16.     16th  Cong.,  1st  Sess.,  Part  I,  pp. 

58-68. 

United  States  Statutes  at  Large.     Vol.  V.     1836-7. 
Reports  of  the  Comptroller  of  the  Currency,  1876.     1892,  Vol.  I.     1896, 

Vol.  I.     1908. 

(299) 


300  Ohio  Arch,  and  Hist.  Society  Publications. 

Abstract  of  the  12th  Census,  1900. 

Ohio  Manufactures.     12th  Census,  1900.     Bulletin  154. 

Location  of  Industries.    12th  Census,  1900.    Bulletin  244. 

Population.    12th  Census,  1900.    Bulletin  41. 

Statistical  Atlas  of  the  United  States.    12th  Census,  1900. 

Statistical  Abstract  of  the  United  States,  1905-1911. 

CASES  CITED. 

Dodge  vs.  Woolsey,  18  Howard  331. 
Fleckner  vs.  Bank  of  United  States,  8  Wheaton  338. 
Fletcher  vs.  Peck,  6  Cranch  87-148. 
Marbury  vs.  Madison,  1  Cranch  137-180. 
McCulloch  vs.  State  of  Maryland,  4  Wheaton  316. 
Ohio  Life  Insurance  and  Trust  Company  vs.  Henry  Debolt   (Treasurer 

of  Hamilton  County),  16  Howard  415-47. 

Osborn  et  al.  vs.  The  United  States  Bank,  9  Wheaton  738-903. 
Piqua  Branch  State  Bank  of  Ohio  vs.  Knoop,  16  Howard  369-415. 
The  State  of  Ohio  vs.  The  Commercial  Bank  of  Cincinnati,  10  Ohio  535. 

OHIO  NEWSPAPERS. 

DAYTON   PAPERS.      (D).* 
Dayton  Repertory,  1808-9. 
Ohio  Sentinel,  1810-13. 
Ohio  Republican,  1814-16. 
Ohio  Watchman,  1816-21. 
Dayton  Watchman,  Apr.  9,  1822. 
Miami  Herald  and  Dayton  Republican,  Feb.  3,  1829. 
Dayton  Journal  and  Advertiser,  1828-29,  1831-40. 
Dayton  Whig  and  Miami  Democrat,  Dec.  29,  1832. 
Dayton  Republican,  1831-33. 
Whig  and  Democrat,  Oct.  5,   1833. 
Dayton  Daily  Journal,  1840-65. 
Dayton   Transcript,   1842-45,   1847-50. 
Dayton  Evening  Empire,  1850-51. 
Dayton  Daily  Gazette,  1850-51,  1853-58. 
Dayton  Daily  Empire,  1851-60,  1862-67. 
Dayton  Daily  Ledger,  1868-69. 

CHILLICOTHE  PAPERS. 

The  Scioto  Gazette,  Mar.  5,  1807,  Sept.  2,  1829.     (W). 
Independent  Republican,  Nov.  15  and  Nov.  22,  1810. 


*The  location  of  the  newspaper  files  consulted  is  indicated  as  fol- 
lows: (D),  Dayton  Public  Library;  (W),  Library  of  Congress,  Wash- 
ington, D.  C;  the  others  in  the  State  Library,  Columbus. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    301 

Fredonian,  Sept.  16  and  tiec.  2,  1812. 

The  Scioto  Gazette  and  Fredonian  Chronicle,  Nov.  28,  1816.     (W). 

The  Supporter,  Aug.  6  and  16,  1816,  Oct.  1818,  Oct.  1819,  Dec.  6  and  13, 

1823,  Jan.  31,  1824.     (W). 
The  Supporter  and  Scioto  Gazette,  1823-25. 
Chillicothe  Advertiser,  May  1,  1841. 
Chillicothe  Gazette,  Dec.  15,  1841. 

COLUMBUS  PAPERS. 

Ohio  Monitor,  1816,  1826-36.     (W). 

Ohio  Monitor  and  Patron  of  Industry,  1821-23. 

Columbus  Gazette,  Aug.  18,  1825.     (W). 

Ohio  State  Journal  and  Columbus  Gazette,  Sept.  1825,  Dec.  1826,  1828. 

(W). 

Ohio  State  Bulletin,  July  1829-July  1830. 
Columbus  Sentinel,  1833-34. 

The  Ohio  Statesman,  July  1837-Dec.  1840.     (W). 
The  Old  School  Republican  and  Ohio  State  Gazette,  1843-44.     (W). 
The  Ohio  Press,  Apr.  1846-Nov.  1847.     (W). 
The  Ohio  Daily  Statesman,  Jan.  17,  1846,  1855,  1857-58.     (W). 
Crisis,  1863-70.     (D). 

CINCINNATI  PAPERS. 

Inquisitor  and  Cincinnati  Advertiser,  1819-20.     (W). 

Murray's  Weekly  Volunteer,  Oct.  6,  1823. 

Liberty  Hall  and  Cincinnati  Gazette,  June  1818-June  1827.     (W). 

Cincinnati  Emporium,  Mar.  1824-Dec.  1824,  1826.     (W). 

Cincinnati  Daily  Gazette  with  Liberty  Hall,  1825.     (D). 

Western  Tiller,  Aug.  25,  1826. 

Cincinnati  Daily  Gazette,  1827-31,  1837-46.     (D). 

The  Chronicle,   1828-29. 

The  Sentinel  and  Star  in  the  West,  Nov.  1829-Oct.  1831.     (W). 

The  National  Republican  and  Ohio  Political  Register,  1830.     (W.) 

Cincinnati  Morning  Herald,  Aug.  1843-Aug.  1844.     (W). 

The  Cincinnati  Daily  Enquirer,  1845-46,  1854,  1856.     (W). 

Cincinnati  Price  Current,  Dec.  12  and  25,  1849. 

Cist's  Weekly  Advertiser,  Dec.  1852-Feb.  1853.     (W). 

Cincinnati  Daily  Gazette,  1862-63.     (W). 

Cincinnati  Daily  Commercial,  1861-66.     (D). 

HAMILTON  PAPERS. 

Miami  Herald  and  Hamilton  Gazette,  1817-20. 

Hamilton  Gazette  and  Miami  Register,  Dec.  14,  1819  and  Mar.  6,  1820. 

Hamilton  Advertiser,  1825-27. 

Hamilton  Intelligencer,  1828-1834. 


302  Ohio  Arch,  and  Hist.  Society  Publications. 


PORTSMOUTH   PAPERS. 

Portsmouth  Gazette,  Aug.  1818-Feb.  1819. 

Scioto  Telegraph,  1820. 

Scioto  Telegraph  and  Lawrence  Gazette,  Aug.  25,  1821. 

Portsmouth  Gazette  and  Lawrence  Advertiser,  July  1824-Oct.  1825. 

Temporary  Advertiser,  Feb.  24-Apr.  6,  1826   (continued  as) 

Western  Times,  Apr.  18,  1826-Nov.  11,  1830. 

DELAWARE  PAPERS. 

Delaware  Gazette,  May  8,  1822. 

Delaware  Patron,  1823-30. 

Ohio  State  Gazette  and  Delaware  County  Journal,  1830-34. 

Ohio  State  Gazette  and  Olentangy  Gazette,  1834-38. 

CLEVELAND  PAPERS.     (W). 

The  Cleveland  Herald,  Oct.  23,  1823,  1850-52. 
The  Cleveland  Times,  1847-48. 
The  Daily  Cleveland  Times,   Oct.  1847. 
Cleveland  Plain  Dealer,  Jan.-Oct.  1848,  1853. 
The  Daily  National  Democrat,  1859-60. 

OTHER  OHIO   PAPERS. 

Circleville  Fredonian,  1811-12. 

Western  Intelligencer,   (Worthington),  1813-15. 

The  Ohio  Patriot  (New  Lisbon),  Feb.  25,  1815. 

Western  Herald  and  Steubenville  Gazette,  1817-20,  1823-24. 

The  Piqua  Gazette,  Mar.  1825-June  1825.     (W). 

Western  Patriot  (Batavia),  July  23,  1825.     (W). 

Western  Star  and  Lebanon  Gazette,  Aug.  1825-Dec.  1826. 

Harrison  Telegraph   (Cadiz),  Dec.  24,  1825. 

Western  Courier  and  The  Western  Public  Advertiser    (Ravenna),  1825- 

27,  1829-30. 
St.  Clairsville  Gazette,  1825-29,  Aug.  3,  1833,  May  9,  1835,  Mar.  29-Aug. 

23,  1844. 

Western  Aegis  (Georgetown),  June  1827-Feb.  1829. 
Hillsborough  Gazette,  Apr.  12,  1828. 

The  Ohio  Repository  and  Stark  County  Gazette  (Canton),  June  20,  1828. 
Belmont  Journal  and  Enquirer   (St.  Clairsville),  May  23,  1835,  Sept.  19, 

1835,  Oct.  17,  1835. 

Maumee  Express    (Maumee  City),  1837. 
Tuscarawas  Advocate   (New  Philadelphia),  Mar.  8,  1844. 
Olive  Branch  and  New  County  Advocate   (Youngstown),  May  17,  1844. 
Liberty  Herald    (Warren),  Nov.  20,  1844. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    303 

Springfield  Republican,  April  1845.     (D). 

Summit  Beacon    (Akron),  Jan.-Dec.  1850.     (W). 

The   Belmont   Chronicle    and    Farmers',    Mechanics',   and    Manufacturers' 

Advocate   (St.  Clairsville),  Sept.  27,  1850. 
Morgan  Herald  (McConnellsville),  Apr.  25,  1851. 
Daily  Commercial  Register    (Sandusky),  1852-53.     (W). 
Daily  Commercial  Register  (Sandusky),  May  1852-May  1853.     (W). 
Hickory  Flail  and  Fusion  Thresher  (Ravenna),  Sept.  19,  1855. 

PERIODICALS. 

Bankers'  Magazine,  Baltimore-New  York,  1846-67. 

Gouge's  Journal  of  Banking,  1842. 

Hunt's  Merchants'  Magazine,  New  York,  1839-65. 

Magazine  of  Western  History,  Vol.  2,  1885. 

Niles'  Weekly  Register  and  Niles'  National  Register,  Baltimore-Wash- 
ington, 1811-1848. 

Ohio  State  Archaeological  and  Historical  Society  Publications,  1885- 

Quarterly  Journal  of  Economics,  Vol.  XVII.  (The  Early  Transporta- 
tion and  Banking  Enterprises  of  the  State  in  relation  to  the  Growth 
of  Corporations  —  G.  S.  Callendar)  pp.  111-162. 

The  Forum,  Vol.  XIX,  April  1895   (Article  by  J.  B.  McMaster). 

BOOKS  AND  ARTICLES. 

Atwater,  Caleb.     A  History  of  the  State  of  Ohio.     Cincinnati,  1838. 

Baker,  H.  F.  Banking  in  the  United  States  (In  Bankers'  Magazine,  Vol. 
IX),  1854. 

Baker,  H.  F.  History  of  Banking  in  the  United  States  (In  Bankers' 
Magazine,  Vol.  XI.)  1856. 

Blodget,  S.    Economica:    A  Statistical  Manual.    Washington,  1806. 

Bolles,  Albert  Sidney.  The  Financial  History  of  the  United  States, 
Vol.  II.  1789-1860. 

Burton,  Theodore.  Financial  Crises  and  Periods  of  Industrial  De- 
pression. New  York,  1903. 

Catterall,  Ralph  C.  H.  The  Second  Bank  of  the  United  States.  Chi- 
cago, 1903. 

Cist,  Charles.     Cincinnati  in  1826. 

Cist,  Charles.     Cincinnati  in   1841. 

Cist,  Charles.     Cincinnati  in  1859. 

Chase,  Salmon  P.  A  Preliminary  Sketch  of  the  History  of  Ohio.  (In 
his  Revised  Statutes  of  Ohio,  Vol.  I).  Cincinnati,  1833. 

Conant,  Charles  A.  A  History  of  Modern  Banks  of  Issue.  New  York, 
1902. 

Dewey,  Davis  R.  Financial  History  of  the  United  States.  New  York, 
1903. 


304  Ohio  Arch,  and  Hist.  Society  Publications. 

Donaldson,  Thomas.     The  Public  Domain.     Washington,  1884. 

Drake,  Daniel.     A  Picture  of  Cincinnati.     1815. 

Elliot,  Jonathan.  The  Funding  System  of  the  United  States  and  Great 
Britain.  Washington,  1845. 

Evans,  Nelson  W.     A  History  of  Taxation  in   Ohio.     Cincinnati,  1906. 

Flint,  Timothy.     Valley  of  the  Mississippi.     Cincinnati,  1832. 

Gallatin,  Albert.  Considerations  on  the  Currency  and  Banking  System 
of  the  United  States.  Philadelphia,  1831. 

Gallatin,  Albert.  Writings.  (Henry  Adams,  editor)  Vol.  III.  Phila- 
delphia, 1879. 

Gilbart  on  Banking,  Vol.  II. 

Gouge,  Wm.  M.  A  Short  History  of  Paper  Money  and  Banking  in  the 
United  States.  (Cobbett's  Edition),  1833. 

Hildreth,  Richard.     The  History  of  Banks.     Boston,  1837. 

Hildreth,  Richard.    Banks,  Banking,  and  Paper  Currencies.    Boston,  1840. 

History  of  Montgomery  County,  Ohio.  (Published  by  W.  H.  Beers  & 
Co.)  Chicago,  1882. 

Howe,  Henry.  Historical  Collections  of  Ohio.  2  Vols.  (Ohio  Centen- 
nial Edition),  Cincinnati,  1904. 

Hull,  George  H.    Industrial  Depressions. 

Huntington,  C.  C.  and  McClelland,  C.  P.  History  of  Ohio  Canals.  Co- 
lumbus, 1905. 

Janney,  J.  J.  State  Bank  of  Ohio.  (In  Mag.  of  West.  Hist.,  Vol.  II, 
pp.  156-175).  1885.  (Mr.  Janney  was  secretary  of  the  Board  of 
Control  from  March  1850  till  May  1865). 

Johnson,  Joseph  French.     Money  and  Currency.     1905. 

Kennedy,  J.  H.  The  Banks  and  Bankers  of  Cleveland.  (Mag.  of  West. 
Hist.,  2 ..-272-290).  1885. 

Kilbourn,  J.     Ohio  Gazetteer.     1826. 

King,  Rufus.     Ohio. 

Knox,  John  Jay.  History  of  Banking  in  the  United  States.  New  York, 
1900. 

Laughlin,  J.  Laurence.  Report  of  the  Monetary  Commission  of  the  In- 
dianapolis Convention.  Chicago,  1898. 

McMaster,  J.  B.  History  of  the  People  of  the  United  States.  Vols. 
IV  and  VI. 

McCulloch,  Hugh.  Men  and  measures  of  Half  a  Century.  New  York, 
1889. 

Poore,  Ben  Perley.  Charters  and  Constitutions.  Vols.  I  and  II.  Wash- 
ington, 1878. 

Rose.     Notes  on  United  States  Reports.     Vol.  II. 

Seligman,  Edwin  R.  A.    Essays  on  Taxation.    New  York,  1895. 

Sumner,  William  G.    A  History  of  American  Currency.    New  York,  1874. 


Banking  and  Currency  in  Ohio  Before  the  Civil  War.    305 

Sumner,  William  G.  History  of  Banking  in  the  United  States.  (A 
History  of  Banking  in  all  the  Leading  Nations,  Vol.  I).  New  York, 
1896. 

Turner,  Frederick  J.    Rise  of  the  New  West. 

Walker,  Francis.    Money,  Trade,  and  Industry.    New  York,  1889. 

White,  Horace.     Money  and  Banking.    Boston,  1896. 

Wilson,  Thomas  H.  Banking  and  Resources  of  Ohio.  (In  World's 
Congress  of  Bankers  and  Financiers).  Chicago,  1893. 

Wilson,  Woodrow.     Division  and  Reunion.     New  York,  1901. 


20 


INDEX 


Agricultural  progress  in  Okio:  before  1825,  27, 
IOC;  1831-37,  127;  1838-42,  169-170,  186;  1852, 
212;  1857,  241. 

Assessed  valuation  of  property  in  Ohio:  211, 
292. 

Banks  chartered  in  Ohio:  before  1815,  29,  32, 
33,  34,  35;  under  Bonus  Law  of  1815,  45, 
47,  49;  1829,  116;  1831,  131;  1832,  133;  1833 
with  capital  of  a  million,  136;  1834,  139. 

Bank  Commissioners  of  Ohio:  enactment  of 
law  providing  for,  164;  first  report  of,  164; 
report  of  1842  favors  restrictions  on  banks, 
173. 

Bank  Committee:  report  of  in  Ohio  legislature 
in  1819,  72.  See  Committee. 

Bank  failures  in  Ohio:  before  1831,  296,  causes 
of,  119;  1841  and  1842,  175;  Old  banks  1846- 
50,  205;  1854,  225;  1857,  242";  Branch  banks, 
255. 

Bank  of  the  Ohio  Valley:  plan  of,  247;  or- 
ganized, 247;  redemption  agency  for  State 
Bank,  248;  condition  of,  248,  295. 

Bank  of  Ohio  and  other  banks:  act  to  incor- 
porate, 236;  opposition  to  proposed  law,  237; 

similar    law    rejected    by    the    voters    1857, 
900 

Zoo. 

Bank  reform  in  Ohio:  slogan  of  Democrats 
1838-46,  200,  206;  or  bank  destruction?  1846- 
50,  206;  in  legislature,  207. 

Baum,  Martin;  organizes  Miami  Exporting  Co., 
29. 

Benefits  derived  from  banks  remaining  in  Ohio 
in  1830:  120. 

Bibliography:  299. 

Board  of  Control  of  State  Bank  of  Ohio:  or- 
ganized, 198;  president  of,  199;  secretary 
of,  304. 

Bonds   and    state    stocks    issued    by    Ohio:    115. 

Bonus  Law  of  1816:  origin  of,  44;  provisions 
of,  45;  banks  organized  under,  47,  48,  49, 
110;  repeal  asked  by  Cincinnati  banks,  65; 
dissatisfaction  with,  109;  taxes  paid  by 
banks  under,  110;  amended  by  substituting 
tax  on  dividends,  112. 

Branches  of  State  Bank  of  Ohio:  provisions 
of  law  regarding,  196;  formation  of  first, 
199;  names,  location,  date  of  organization, 
and  profits  of  to  1853,  293;  condition  of 
1846-63,  276;  method  of  protecting  note  hold- 
ers, 253;  cases  of  failure  of,  255. 

Brokers'  assorting  system:  246. 


Broker  establishments:  Ohio  bankers  interested 
in,  215;  increase  of  in  Ohio,  216. 

Buying  notes  at  a  discount:  law  against  in 
1819,  67. 

Capital:  need  of  banking,  in  Cincinnati  in 
1826,  114;  demand  for  in  other  industries 
in  Ohio  in  1829  prevents  subscriptions  to 
stock  of  Com'l  Bk.  of  Cincinnati,  116; 
in  Ohio  banks  owned  by  non-resident  stock- 
holders in  1833,  137;  private,  in  Ohio  ia 
1843  and  1844,  190;  demand  for  banking  in 
Ohio  in  early  50's,  220;  of  Cincinnati  men 
maintaining  foreign  note  circulation,  220; 
decline  of  banking,  in  Ohio  in  1855,  236. 

Capital  stock  of  Ohio  banks:  Miami  Exporting 
Co.,  31;  others  organized  before  1815,  32, 
33,  34,  35;  organized  under  Bonus  Law, 
45,  47,  48,  49;  increase  of  1815-17,  50;  in 
1819,  75;  in  January  1830,  121;  authorized  in 
1834,  over-subscribed,  139-41;  organized 
under  law  of  1845,  276. 

Canal:  Erie,  opening  of  and  beginning  of  Ohio 
canals,  170;  expenditures  in  Okio  increase 
money  supply  in  1827,  115;  system,  extent 
of  in  Ohio,  107;  effects  of  Ohio  system,  169; 
statistics  in  Ohio,  170. 

Case,  Leonard:  cashier  Com'l  Bk.  of  Erie, 
134. 

Charters  of  Ohio  banks:  granted  by  special 
acts  of  legislature  before  1842,  29,  32,  34,  36, 
45,  49,  131,  136,  139;  expiration  of  majority 
of  in  1843,  180;  termination  of  remainder, 
185. 

Classes  of  Ohio  banks  under  general  laws: 
251. 

Chillicothe:  first  settled,  24;  bank  of,  organ- 
ized, 33;  charter  provisions,  33;  land  office 
established  at,  42;  bank  convention  at,  in 
1816,  54;  U.  S.  Branch  bank  opened,  88; 
State  collects  tax  from  U.  S.  Bank  Branch, 
90. 

Circulation:  of  Ohio  banks  in  1819,  74;  ratio 
of  to  capital  stock  in  Ohio  banks  in  1819, 
78;  1846-63,  343;  rapid  increase  of  in  Ohio 
just  before  1837,  130;  proportion  of  specie 
to  for  Ohio  banks  in  1835,  146;  ratio  of  to 
specie  for  certain  Ohio  banks  in  1837,  160; 
reduction  of  by  Ohio  banks  in  early  40's, 
176;  of  Ohio  banks  at  highest  point  before 
the  war  1851,  211;  increase  of  and  prices  in 
1845,  201;  of  certain  foreign  banks  main- 


(307) 


308 


Index. 


tained  by  Cincinnati  capital,  220;  in  Ohio 
retarded  by  cost  of  exchange  due  to  de- 
preciated currency,  222. 

Commerce:  increase  of  in  U.  S.  1814-1816,  59; 
1S30-40,  125. 

Commercial  crisis  in  Ohio  in  1854:  226. 

Committee  of  Ohio  legislature:  discusses  state 
bank  in  1817,  56;  report  of  in  regard  to 
taxing  U.  S.  Bank,  72,  86;  report  of 
special,  in  1820  on  fight  against  U.  S.  Bank, 
94;  favors  state  bank  in  1829,  116;  in  1830 
favors  tax  on  bank  dividends,  132;  favors 
state  bank  1833,  135;  in  1836  against  char- 
tering more  banks,  149;  reports  right  to 
issue  small  bills  a  vested  right  of  the 
banks,  151;  report  of  Senate  committee  in 
favor  of  safety  fund  principle,  171;  report 
bill  for  State  Bank  of  Ohio,  193. 

Condition  of  Ohio  Banks:  before  1815,  38; 
January  1819,  73,  75;  1829,  117;  March  1835, 
145;  on  three  dates  in  1837,  160;  1842,  178; 
1854,  226. 

Constitutional  Convention  in  Ohio:  struggle 
in  over  banking,  206;  clause  of  consti- 
tution of  1851  regarding  banking,  207. 

Cost  of  exchange  in  Ohio  due  to  depreciated 
currency,  221,  297. 

Cost  of  foreign  banking  capital  in  Ohio  in 
1833,  138. 

Counterfeit  notes:  67. 

Credit:  of  Okio  banks  before  1815,  39;  allowed 
in  land  sales,  42;  contraction  of  in  1817, 
69;  expansion  of  by  U.  S.  Bank  in  West, 
60;  restriction  of  by  U.  S.  Bank,  62;  on 
merchandise  purchases,  influence  of  in 
west  in  1819,  71;  excessive,  and  speculation, 
127,  242. 

Crisis  of  1818-19:  begins  in  Miss.  Valley,  58; 
causes,  59;  account  of,  chap.  III. 

Crow  Bar  Law:  enacted  to  enforce  payment 
of  taxes  by  Ohio  banks,  232. 

Currency:  fluctuations  in  Ohio,  169;  in  Ohio 
supplied  by  bank  notes  of  adjoining  states, 
176;  demand  for  and  increase  in  Ohio  in 
early  30's,  130,  134;  increase  in  U.  S. 
1830-37,  130;  lack  of  Cincinnati  in  1826,  114; 
in  U.  S.  in  1843,  190;  depreciated,  in  Ohio 
1853-5,  221;  failure  of  Ohio  banks  to  provide 
good  home,  224. 

Debt:  in  Miss.  Valley  in  1820,  71;  due  U.  S. 
Branch  Bank  in  Ohio,  74;  national,  pay- 
ment of,  128;  of  stockholders  to  Ohio 
banks,  165,  206;  foreign  and  domestic  of 
Ohio,  1833-56,  292". 

Defects  of  Ohio  banking  system  prior  to  1845, 
119,  164-6,  173,  180. 


Demand  for  more  banking  facilities:  Cincinnati 
in  1826,  114;  Ohio  in  1832,  133;  general  in 
1836,  149;  Cincinnati  in  1850,  208;  Ohio  in 
early  50's,  220. 

Deposits:  in  Ohio  banks  in  1819,  74;  ratio  of  to 
specie,  78;  withdrawal  of  public,  from  U.  S. 
Bank,  128;  and  loans,  increasing  importance 
of,  1854,  224. 

Depreciation  of  bank  notes:  produces  high 
prices  in  1816  and  1817,  53;  effect  of  re- 
sumption, 55;  general  in  the  west  in  1819, 
81;  not  chief  cause  of  depression  in  early 
20's,  105;  of  Ohio  banks  in  1822  and  1828, 
117;  in  Ohio  beyond  vicinity  of  issuing 
bank,  1833,  138;  circulating  in  Ohio  1853-5, 
221. 

Difficulty  in  collecting  state  taxes  from  banks: 
111,  175. 

Distribution  of  Ohio  banks:  by  counties  in 
1819,  79;  and  capital  in  1830,  121;  by  coun- 
ties in  1835,  147;  in  1842,  179;  by  counties 
in  1847,  203;  by  counties  in  1857,  240. 

Dividends  of  Ohio  banks:  prior  to  1815,  38; 
about  1817,  51;  in  early  30's,  138;  difficulty 
of  state  getting  report  of,  175;  after  1845, 
293;  basis  of  taxation,  38,  110,  112,  132,  154, 
174,  191,  228. 

Economic  Conditions  in  Ohio:  before  1812,  27; 
after  War  of  1812,  42;  1818,  57;  lack  of 
markets  before  canal  period,  106;  indus- 
trial awakening  after  canals  opened,  107, 
115;  1829,  117;  business  expansion  1831-37, 
126,  effect  of,  169;  era  of  internal  improve- 
ments, 124;  1840,  170;  1842-45,  186;  exports 
or  exchanges  in  early  40's,  187;  effect  of 
state  bank  law  on,  201;  period  of  business 
expansion  1848-52-,  211;  1852-7,  241. 

Elections:  in  Ohio  in  1819  influenced  by  fight 
against  U.  S.  Bank,  93. 

Embargo  Act:  increases  western  immigration, 
41. 

Exchange  operations  in  Ohio:  arising  from 
exports  in  early  40's,  188;  financial  dis- 
turbances of  early  in  1834,  138;  source  of 
profit  to  banks,  213;  cost  increased  by  de- 
preciated currency,  221,  297;  subject  to 
fluctuating  currency,  224. 

Exports  from  Ohio:  1840,  169,  187;  1852,  211; 
1857,  241. 

Failed  banks  in  Ohio:  see  bank  failures  in 
Ohio. 

Financial   disturbances   in   1834,    138. 

Foreign  bank  paper  in  Ohio:  large  circulation 
of,  176,  188;  maintained  by  Cincinnati 
capital,  220. 


Index. 


309 


Free  Banks  in  Ohio:  law  providing  for,  209, 
271;  organized  in  1851  and  1852,  210;  names, 
location,  date  of  organization  and  profits 
to  1853,  294;  statistics  of,  279. 

Frontier  conditions:  a  cause  of  early  banking 
difficulty  in  Ohio,  119,  180. 

General  Banking  Law  of  1842;  enactment  of, 
177;  banks  authorized  under,  objections 
of  banks  to,  and  amendment  of,  177,  178, 
191;  personal  liability  feature,  191. 

General  Banking  Law  of  1845:  enactment  of, 
195;  provisions  of,  196-8;  formation  of 
banks  under,  199,  293;  opposition  to,  200; 
digest  of,  267. 

Governors'  Messages  to  Ohio  Legislature  re- 
garding banking:  Worthington,  advocates 
bonus  law,  44;  Brown,  favors  tax  on  U.  S. 
Bank,  88;  Trimble,  alludes  to  prosperous 
condition  of  state  in  1829,  117;  Lucas,  rec- 
ommends state  bank,  137,  comments  on  in- 
creased capital,  144,  recommends  prohi- 
bition of  small  bills,  151;  Shannon,  favors 
independent  banks  and  opposes  state  bank, 
167;  Cor  win,  analyzes  objection  to  banks, 
168,  discusses  holding  of  Ohio  bank  capital 
by  non-residents,  172;  Thos.  W.  Bartley, 
explains  purpose  of  general  banking  law 
of  1842,  177,  opposes  state  bank  in  1844,  192; 
Mordecai  Bartley,  advocates  free  banking 
system  in  1844,  192,  says  new  State  Bank 
law  caused  revival  of,  business  1845,  199; 
Chase,  on  foreign  circulation,  1856,  219, 
favors  repeal  of  10%  Interest  Law,  237, 
favors  free  banking  1857,  237,  recommends 
clearing  house  in  Ohio  Valley,  246,  on  Ohio 
banks  in  panic  of  1857,  249. 

Hammond,  Charles:  chairman  of  committee 
of  Ohio  Legislature  reporting  on  taxation 
of  U.  S.  Bank,  94,  101:  represents  Ohio  in 
case  of  Osborn  vs.  U.  S.  Bank,  99. 

Hard  times  in  Ohio:  increase  hostility  to  U. 
S.  Bank,  94;  low  prices  and  scarcity  of 
money  in  1841,  170;  fall  in  prices  1818,  59, 
60. 

High  prices:  produced  by  depreciation,  53;  and 

speculation,  59;  in  land,  42,  109. 
Immigration:    into    Ohio    after    War    of    1812, 
41,    57;    decline    of    western    after    1817,    71, 
104;   increase  after  1830,  124. 
Imports:    of    merchandise    into    U.    S.    1814-16, 
57,     59;     1830-37,     126;     into     Ohio,     1837-41, 
170. 

Indebtedness  of  directors  and  officers  to  Okio 
banks,  165. 


Independent  Banks  in  Ohio:  authorized  in 
State  Bank  Law,  197;  name,  location,  date 
of  organization,  and  profits  to  1853,  294; 
statistics  of,  1846-63,  277. 

Index:  307. 

Individual  liability:  of  directors  in  certain 
cases  under  Ohio  law  of  1839,  164;  of  stock- 
holders, prominent  feature  of  the  general 
banking  laws  of  Ohio  in  1842  and  1843, 
174,  177,  191;  under  free  banking  law, 
272. 

Inflation:  begins  in  Miss.  Valley  in  1815,  43,  59; 
increased  in  West  by  U.  S.  Bank,  61;  in 
the  U.  S.  just  before  1837,  130;  climax  of 
in  Ohio  in  1836,  149;  U.  S.  Government 
tries  to  check,  156;  relation  to  public  land 
sales,  157;  in  Ohio  in  1854,  226. 

Interest:  charged  state  banks  by  U.  S.  Bank, 
62;  rate  on  foreign  capital  in  Ohio  in  1833, 
138;  on  loans  of  Ohio  Life  Ins.  &  Trust 
Co.,  142;  source  of  profit  to  Ohio  banks, 
213;  10%  law  in  Ohio,  214;  earned  by  brok- 
ers in  Ohio,  215;  annual  on  state  debt  of 
Ohio,  1833-56,  292. 

Internal  Improvements  in  Ohio:  beginning  of, 
107;  effect  of,  169;  see  Canals. 

J.  J.  Janney:  Secretary  of  board  of  control, 
304. 

Kelley,  Alfred:  author  of  bill  for  State  Bank 
of  Ohio,  193;  of  Gen.  Property  Tax  Law, 
229;  of  Ohio  bank  tax  law  of  1856,  234; 
of  another  state  bank  law  in  1857,  238; 
Pres.  of  Com'l  Bk.  of  L.  Erie,  134;  plan 
for  specie  pay,  243. 

Kentucky  and  Virginia  Resolutions  reaffirmed 
by  Ohio  Legislature:  96. 

Kiting:  214. 

Land:  rise  in  prices  of  in  west  after  War  of 
1812,  42;  dullness  in  sales  of  in  Ohio  in 
early  20's,  104;  object  of  speculation,  127, 
129;  relation  of  inflation  to  sales  of  public, 
157;  receipts  from  sales  of  public,  265. 

Land  offices:  established  in  Okio,  42;  accept 
only  specie  for  sales  of  public  land,  1836, 
156. 

Lexington  Insurance  Company:  30. 

Loans  and  discounts:  to  directors  and  stock- 
holders, 165,  205;  statistics  of  1846-63,  276, 
283. 

Location  of  Ohio  banks:  see  Banks  chartered, 
and  Appendix,  293. 

"Loco  focos"  gain  power  in  Ohio  legislature: 
149. 


310 


Index. 


Low  prices:  in  Ohio  and  the  West  in  1819,  69, 
70:  in  Ohio  in  early  20* s,  102;  and  hard 
times  in  Ohio  in  early  40's,  170;  and  in- 
adequate banking  facilities  in  Ohio,  189. 

Manhattan,  Bank  of:  incorporated  in  Mich. 
Ter.  but  organized  under  Ohio  laws  in 
1836,  149. 

Markets:  lack  of  in  Ohio  for  surplus  products 
before  canal  period,  106;  effect  of  canals 
on,  125. 

Manufacturing:  early  development  in  Ohio, 
27;  value  of  product  and  export  from  Ohio, 
1857,  241. 

Marietta:  Settlement  of,  22;  Bank  of,  the  first 
regular  bank  in  Ohio,  32;  charter  pro- 
visions, 32. 

McCulloch  vs.  Maryland:  case  of  decided,  89; 
defines  status  of  national  banks  as  agencies 
of  U.  S.  Government,  99. 

Martin  Baum:  29. 

Miami  Country:  early  population  and  progress, 
28;  low  prices  in,  in  early  20's,  102. 

Miami  Exporting  Company:  organization  and 
object,  29;  the  first  bank  in  Ohio,  30; 
charter  provisions,  31;  failure  and  re- 
organization, 32,  165;  increase  of  capital 
stock,  31,  35;  refuses  charter  under  Bonus 
Law,  46,  110;  State's  claims  against  sold 
at  discount,  111. 

Names  of  Ohio  Banks:  see  Banks  ckartered, 
and  Appendix,  293. 

National  banks:  many  Ohio  banks  become, 
250. 

New  banking  system  in  Ohio:  agitation  for  in 
early  40's,  171,  192;  adopted,  195,  209. 

No-Bank  Party:  in  power  in  Ohio,  149;  in 
constitutional  convention,  206;  see  Political 
relations. 

Non-resident  stockholders  in  Ohio  banks:  in 
1833,  137. 

Note  redemption  agency:  established  by  State 
Bank  of  Ohio,  244;  opportunity  for,  245;  of 
1854  and  1857,  245. 

Office-holders:  organization  of  Clinton  Bank 
of  Columbus  by,  140. 

Ohio  bank  agency  of  1850:  244. 

Ohio  Bank  Convention,  June  1837:  160. 

Okio  Life  Insurance  and  Trust  Co.:  char- 
tered, 140;  powers  and  business,  141;  stock 
largely  held  in  Wall  St.,  143;  real  estate 
loans  in  Ohio  in  1836,  266;  failure  occasions 
panic  of  1857,  2'42. 

Old  Banks  in  Ohio:  in  1844,  185;  failure  of 
certain,  205,  225;  statistics  of,  1846-57,  276. 

Osborn  vs.  United  States  Bank;  Case  of: 
importance  of,  98;  decision  in,  100. 


Panic  of  1818-19:  Precipitated  by  U.  S.  Bank, 
60,  85;  of  1837  intensified  by  crop  failures, 
159. 

Panic  of  1857:  occasioned  by  failure  of  Ohio 
Life  Ins.  &  Trust  Co.,  242;  majority  of 
Ohio  banks  survive,  249. 

Personal  liability:  see  Individual  liability. 

Political  relations  of  banking  question  in  Ohio: 
influence  of  U.  S.  Bank  fight  on  elections, 
93;  the  No-Bank  party,  149;  struggle  over 
the  Small  Note  Law,  154,  162;  vote  to 
amend  general  banking  law  of  1842,  177, 
178;  bank  party  victory  in  1844,  193;  vote 
on  State  Bank  bill  1845,  194;  renewal  of 
State  Bank  fight  1846,  200;  bank  reform 
or  bank  destruction?  206;  position  of 
Whigs  and  Democrats  in  1846,  200;  con- 
stitutional convention,  206;  bank  taxation, 
230,  233-5. 

Population:  in  Miami  Country  before  1815,  28; 
increase  in  Ohio  and  adjoining  states,  1810 
to  1820,  41;  between  1820  and  1830,  108; 
growth  of  in  Ohio  1830-40,  124,  187;  in 
Ohio  in  1850,  211;  in  1860,  240. 

Pork  packing  industry:  centered  at  Cincinnati, 
187. 

Post  Notes:  laws  against,  67;  condemned  by 
Bk.  Com'rs.  of  Ohio,  164. 

Premium  on  N.  Y.  exchange  in  Ohio:  139,  221, 
297. 

Prices  of  Ohio  produce:  53,  70,  102,  170,  189, 
201,  241,  291. 

Private  banks  in  Ohio:  increase  of  in  50's,  216; 
in  1864,  250. 

Profits  of  Ohio  banks:  before  1815,  39; 
about  1817,  51;  about  1833,  138;  during 
years  1850-53,  212;  of  individual  banks  in 
1853  and  from  organization,  293;  sources 
of,  213. 

Public  land  sales:  effect  of  credit  sales,  42; 
relation  of  bank  note  inflation  to,  157; 
receipts  from,  1796-1841,  265. 

Public  works  in  Ohio:  extent  and  effects  of, 
107,  169;  increase  money  supply,  115;  see 
Canals,  and  Internal  improvements. 

Quotations  of  Ohio  bank  notes:  at  Phila.  in 
early  20's,  105;  at  Phila.  1814-31,  259;  at 
New  York,  1832-38,  262-3. 

Railroads:  124,  226,  242. 

Refusal  of  Ohio  banks  to  pay  tax  under  laws 
of  1852,  1853,  and  1858:  232-4. 

Resources  and  liabilities  of  Ohio  banks:  in 
1819,  75;  1835,  146-7;  1837,  160;  1842,  178-9; 
1846-63,  276. 


Index. 


311 


Resumption  of  specie  payment:  by  Ohio  banks, 
65;  in  1838,  162;  attempts  of  Ohio  legislature 
to  compel,  176. 

Revenues  and  expenditures:  of  State  of  Ohio, 
1833-56,  292. 

Rowlett's  tables:   268,  270. 

Safety  Fund  System:  discussed  in  Ohio,  168; 
established  in  State  Bank  of  Ohio,  196,  268; 
objections  considered,  252;  in  Ohio  com- 
pared with  that  of  New  York,  253. 

Scarcity  of  money  in  Ohio  in  1832:  134;  in 
1842-3,  189;  in  early  50's,  220. 

Schemes  to  avoid  redemption  of  Ohio  bank 
notes:  222. 

Security  for  note  issue:  Ohio  banks  classified 
as  to,  252. 

Semi-annual  statements  to  Auditor  of  State: 
269. 

Shinplasters:  issued  by  bridge  and  turnpike 
companies  and  towns,  57,  58;  flood  Ohio 
from  other  states  in  1854,  219. 

Small  Notes:  numerous  in  Ohio  in  1818,  67; 
U.  S.  Treas.  Dept.  during  the  30's  urges 
states  to  suppress,  150;  objections  to,  150; 
Governor  of  Ohio  recommends  prohibition 
of  in  1834,  151;  extent  of  circulation  of, 
152;  Ohio  legislature  asks  banks  to  sur- 
render right  to  issue,  153;  law  against 
in  Ohio,  154,  effect  of,  155;  majority  of 
Ohio  banks  surrender  right  to  issue,  155; 
repeal  of  law  against,  161;  re-enactment  of 
law  against,  167. 

Special  acts  of  legislature:  the  means  of 
organizing  banks  in  Ohio  before  1845,  29, 
32,  34,  36,  46,  49,  116,  131,  136,  139;  number 
passed  from  1802  to  1850,  207. 

Specie:  scarcity  in  Ohio  in  1818,  64;  reported 
by  Ohio  banks  1846-63,  276. 

Specie  Circular:  precipitates  the  crash  in  1836, 
156. 

Specie  paying  banks  in  Ohio:  in  1820,  83;  1842, 
173,  178,  179;  1843  and  1844,  185. 

Speculation:  in  Miss.  Valley,  43,  57,  59;  re- 
lation of  to  credit,  129;  panic  of  1857,  242. 

State  Bank  of  Ohio:  proposition  for  in  1817,  56, 
65;  discussed  in  legislature  1829,  115;  ad- 
vocated by  senate  committee  in  1833,  135; 
bill  for  before  legislature  in  1833,  135;  bill 
for  defeated  in  legislature  in  1834,  139; 
before  the  legislature  in  1843,  192;  Kelley's 
Bank  Bill  of  1845,  193;  law  of  1845,  Chap.  9, 
pp.  195-8;  threatened  by  failure  of  Ohio 
Life  Ins.  &  Trust  Co.,  243;  compared  with 
State  Bank  of  Indiana,  253;  compared  with 
New  York  Safety  Fund  System,  253;  com- 
pared with  Ohio  stock  banks,  255;  branches 
of,  293. 


Statistics:  of  banking  capital  in  U.  S.  after 
1815,  50;  distribution  of  state  banks  in 
U.  S.  in  1818,  58;  Ohio  banks  in  1819,  75; 
lack  of  for  Ohio  banks  1820-30,  113;  num- 
ber and  capital  of  Ohio  banks  at  various 
periods  1805-30,  122;  Ohio  banks  is- 1830, 
121;  Ohio  banks  in  1835,  144-8;  Ohio  banks 
in  1837,  160;  .Ohio  banks  in  1838,  163;  Ohio 
canal  skipments,  170;  Ohio  banks  in  1842, 
178;  growth  of  banking  in  Ohio  1845-7,  203; 
Ohio  banks  in  relation  to  growth  of  de- 
posits 1851-4,  1860-3,  224-5;  Ohio  banks  1846- 
63,  276. 

Steubenville :  first  settled,  24;  Bank  of,  or- 
ganized, 34;  charter  provisions,  35. 

Supreme  Court  of  U.  S.  Decision  in  case 
of  McCulloch  vs.  Maryland,  89,  99;  decision 
in  case  of  Osborn  vs.  U.  S.  Bank,  100; 
rules  taxing  features  of  law  creating  State 
Bank  of  Ohio  constitute  a  contract  obli- 
gation not  to  be  impaired  by  later  laws, 
231,  234. 

Surplus:  products,  lack  of  market  for  Ohio 
before  canal  period,  106;  revenue,  distri- 
bution of,  among  the  states,  128;  banks 
taxed  on,  etc.,  230,  234. 

Suspension  of  specie  payment:  after  War  of 
1812,  39,  51;  increases  depreciation,  52;  by 
Ohio  banks  in  1818,  63,  72;  general  in  1837, 
157;  causes  of  by  Ohio  banks,  159;  1839,  163; 
1857,  242;  during  Civil  War,  235. 

Taxation  of  Ohio  banks:  on  dividends,  38,  110, 
112,  132,  154,  174,  191,  228;  under  the  bonus 
law,  45,  109,  111,  112;  on  dividends  and 
capital  stock,  191;  on  profits  after  deducting 
expenses  and  losses,  228;  on  capital  stock 
and  surplus,  230;  on  loans  and  discounts, 
231;  on  capital  stock,  surplus,  contingent 
fund,  and  undivided  profits,  (Kelley's  Bank 
Tax  Law),  234;  on  loans  and  discounts, 
other  money  employed  for  profit  (less  re- 
serve), and  balances  due  from  banks, 
234. 

Tax  on  U.  S.  Bank:  law  levying  in  Ohio,. 
68,  89;  in  other  states,  85;  forcibly  collected 
in  Ohio,  90. 

Ten  percent  interest  law  in  Ohio:  214. 

Unauthorized  banking  in  Ohio:  during  1811,  35; 
Granville  Alexandrian  Society,  37,  66; 
Scioto  Exporting  Company,  37;  certain  un- 
authorized banks  later  given  charters,  30; 
act  to  prohibit  in  1815,  37;  laws  against, 
45;  John  H.  Piatt  &  Co.'s  Bank,  58,  66,  81; 
Bank  of  Xenia,  58,  66;  Owl  Creek  Bank, 
66;  increase  of  1818,  66;  foreign  paper,  170,, 
188;  failure  of  laws  against,  218. 


312 


Index-. 


United  States  Bank:  First,  expiration  of  char- 
ter, 35,  37;  Second,  established,  54;  branches 
in  Ohio,  55;  occasion  of  crisis  in  West,  60; 
relations  with  Cincinnati  banks,  63;  specie 
drained  from  Ohio  by,  69;  early  state  oppo- 
sition to,  85;  kostility  against  in  Ohio, 
88;  law  taxing  in  Ohio,  89;  made  an  out- 
law in  Ohio,  98;  refusal  to  re-charter, 
127. 


White    males    in    Ohio:    number    of    at   5    year 

periods,  104,  105,  109. 
Worthington:  Message  of  Governor,  on  banks, 

44;  Thomas,  on  prices  in  Ohio  in  1824,  103. 
Xenia:     Bank     of,     applies     for     charter,     66; 

branch  bank  at,  198. 

Youngstown:  Mahoning  Co.  Bank  at,  294. 
Zanesville:   beginning  of,  24;   canal  and  ma»u- 

facturing    company    organized,    37;    variety 

of  bank  paper  in,  1818,  67. 


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